Claims loyal customers are losing on average £877 a year prompt action by the consumer watchdog

Sadly loyalty counts for very little these days or worse - some insurers and utility providers regard loyal customers as fodder ripe for a rip off. The excess "loyal stuffees" pay up on renewals goes to subsidise the competitive quotes the providers offer in the market to those shopping around. But haggling is not a natural activity for many but sadly one most will have to accept now if they do not simply roll over on renewal and pay up as a "loyal stuffee".

Shopping around for motor insurance is not easy as you have to compare the scope of the policy with your renewal cover, check policy excess amounts, check agreed values and limited mileages, check the agreed no claims discount, check overnight parking requirements (does the car have to be garaged when at the policyholder's address?), check key policy conditions (for example how scrappage is handled with a claim) and try and check the provider's claims handling performance. It can be a tedious exercise taking hours of your time to arrive at a point where you can compare quotes and then decide what to do. Return to your current provider and haggle or dump them and head for a better offer.

See our earlier NEWS items on the "loyal stuffee" topic

"Loyal stuffees" continue to be ripped off by insurers & utility companies. 181208 More
Be prepared to haggle over motor insurance renewals. 180427 NEWS
Time to haggle on motor insurance renewals. 171219 NEWS
Insurance renewals. Gateway

Posted: 181219
The lead BBC online news report today is "loyalty came at a cost for Nick Munday - a cost that can be calculated as £1,250 a year. The 61 year old had been a home and contents insurance customer with the same provider for 20 years and was eventually paying a premium of £2,00 a year. A phone call querying the cost reduced the premium to £750. Now the UK competition watchdog (Competition and Markets Authority or CMA) has said millions of unsuspecting loyal or vulnerable customers are being taken advantage of each year by firms and they end up paying much more than they should. This must come to an end". BBC News
Photo credit alongside: BBC News website

In May 2018 BBC News reported "the insurance industry has pledged to crack down on "excessive" differences in premiums for new customers and existing policyholders. The plan aims to iron out some of the controversial big differences between premiums for new and existing clients. The move follows new rules that force firms to display the previous year's premium on renewal notices. The new guidelines apply to home, motor and travel insurance, but not pet or health cover.

The Association of British Insurers (ABI) and the British Insurance Brokers' Association (BIBA) say their Guiding Principles and Action Points should mean "an improvement in the outcomes for long-standing customers". The new commitments by ABI and BIBA members include:
Not supporting excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.
Members will take action so that customers' tendency to shop around at renewal is not used to lead to excessive pricing differences that unfairly penalise long-standing customers.
Firms should make clear in written, online or verbal customer communications that the new customer premium only applies for that year and subsequent renewal premiums may be higher".

Has there been any real change?

Association of British Insurer's chairman Andy Briggs
He said insurers did a "great job" for their customers, "but the renewal market simply doesn't work where loyal customers get charged much more than new customers". He added "given many consumers expect to get cheaper insurance when they shop around, there it's no easy solution. These new guiding principles and action points are a positive initiative by the ABI and BIBA members to demonstrate that the whole industry recognise this is an important issue that needs to be addressed."

Gareth Shaw of Which? said: "a review of the unfair practice that sees existing customers charged excessively steeper premiums than new customers is long overdue. We regularly hear from consumers who are paying hundreds of pounds more a year than new customers because they've automatically renewed their cover. Insurers must now act with urgency and implement much-needed changes to ensure their customers aren't excessively penalised simply for their loyalty."

Simon Gompertz, BBC personal finance correspondent noted "insurers are finally owning up to what customers have been complaining about for years: the more loyal they are, the more they seem to pay. The extra cost can amount to hundreds of pounds a year on a policy. People selling insurance have become addicted to the ruse of offering big discounts to new buyers to keep business moving. If you don't bother to shop around, you end up footing the bill. The problem with today's plan is that it will be left up to individual insurers to decide which prices are excessive and how to narrow the gap. Customers will still need to check what they are paying to make sure they aren't being taken for a ride."

Gillian Guy, chief executive of Citizens Advice
, said its research had found that long-standing home insurance customers could pay an average of £110 more a year than new customers.
The new plan showed the industry "recognises the scale of this problem and is willing to act responsibly to stop consumers being penalised for their loyalty." BBC News

Premium comparison easier now
Fortunately the UK Government introduced a requirement that insurers must disclose on their renewal notice the premium paid in the previous year making a premium comparison easier.

Shop around and haggle!
For many classic car enthusiasts who have grown up believing loyalty had a value, sadly that is no longer the case. So shop around and haggle!