Drivers will save £200 as insurance loyalty penalty outlawed
City watchdog says the reforms will save customers £3.7bn over a decade
28 May 2021 • 9:32am
Loyal customers could save up to £200 a year on their car and home insurance after the City watchdog confirmed plans to ban the so-called loyalty penalty.
For many years, insurance firms have kept the best deals for new customers while charging existing policyholders more when they renew. Less financially savvy customers who do not shop around each year have paid more as a result.
The Financial Conduct Authority confirmed it will outlaw this practice from September, also known as “price walking”, and make it easier for policyholders to cancel the automatic renewal of their policy.
Britain's financial regulator said on Friday it will move to protect consumers from so-called loyalty penalties in motor and home insurance, potentially saving an estimated 4.2 billion pounds ($5.95 billion) over 10 years.
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The Association of British Insurers and the U.K. government will end the trade credit reinsurance program for businesses on June 30, as insurers suggest that they are ready to underwrite businesses without any assistance.
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The change, which begins in January, is expected to save customers an estimated £4.2billion over a decade. It means those who have been unwittingly paying unreasonably high premiums – around six million policyholders – could have them slashed when the measures come into effect.
The changes will put an end to the very high prices paid by many loyal customers , the regulator said.
On average a new customer pays £285 for motor insurance while those who have been with their provider for more than five years pay £370. I saved £1,000 by finding a new provider
Sam Devo s car insurer failed to reward his loyalty so he took his business elsewhere