Over recent years, there has been much controversy over how insurance companies charge higher premiums to existing customers. Most insurance companies offer new customers excellent deals with low premiums and other perks. However, when it comes to existing loyal customers looking to renew their cover, they often charge them far more.
The Financial Conduct Authority (FCA) recently announced it was putting an end to this practice by changing the rules so that insurers could no longer penalise existing customers. This move will benefit vast numbers of people across the UK.
Billions will be saved over the next decade
According to the FCA, the changes to the rules could mean savings of over £4 billion for consumers over the next decade by putting a stop to so-called ‘price walking.’ The changes will come into force from January 2022. Many people will be hugely relieved they will no longer pay over the odds for cover simply because they have decided to stay with the same insurer.
Many people have avoided this situation by ensuring they can access new customer deals each year by switching insurance companies each year rather than renewing with the same provider. Many, although not all, insurers will also price match any quotes you receive to retain your business.
While switching is an effective way for many to access the best deals, it has also led to inconvenience for those limited for time or lacking computer access. In addition, some people do not particularly want to switch to a new insurance provider but are forced to do so to avoid experiencing a sharp rise in premiums.
Could affect cheapest deals for new customers
While the changes are undoubtedly good news for those who do not want to switch insurance companies each year to avoid price hikes, it could mean bad news for new customers. As a result of the changes, new customers may find it more challenging to find the cheapest insurance deals. However, officials have said that shopping around and comparing different providers can help them find the most suitable and affordable plans and providers.
In the meantime, existing customers of insurance providers can look forward to avoiding unwarranted hikes in premiums, which are imposed by insurers even though the policyholders have not made any claims against their policies. This will make it much easier for those who want to remain with the same insurance provider but avoid being financially penalised for doing so.