Why often insurance customers’ loyalty does not pay

If you stick with one insurer for any type of cover,you may find  over time that you are paying many times more for the same product as a new customer. Fact.

Today,there are frequent reports of misplaced loyalty ,where  longstanding customers find themselves substantially out-of-pocket when compared with others who move their insurance business around. According to a recent BBC news report one such disadvantaged customer was a lady who had insured her house, a two-bedroom terrace house, and its contents with the NatWest for 38 years. Every year, it was reported, Alison Gann allowed her policy to be renewed when she received her annual renewal letter. Over the years the annual rate of premium just went up and up, until her latest premium rose above £1,000. Apparently, she had a good claims record with only two minor claims in the last 20 years. Her requirements had otherwise little changed.

Take action at annual renewal time

The key thing to do when you receive a letter inviting you to renew your policy is ACT ON IT! A large number of renewals go through ‘on the nod’, no action to see if what is being quoted is reasonable in line with the market.Alison didn’t act. She trusted her bank to do the right thing.Then,when she found out she was paying (and probably had been for a number of years) many times more than some  of her neighbours she was ,at first given the ‘brush-off’ being told she should have allowed the policy to lapse if she did not want to renew. Later, after some intervention from the BBC consumer affairs programme Moneybox offered a review to see how much she had overpaid.She did not accept a much reduced figure, deciding to go elsewhere for yet an even lower payment.Good on her!

Why is this happening?

It seems that  loyalty to longstanding customers has diminished in recent years as comparison web sites have entered to influence the market. Loyalty is no longer to be rewarded is the view of a money expert at Which?  The insurance provider’s view appears now to be : you have the opportunity at renewal to shop around to see if you can obtain a better deal.It is your responsibility to do so.

The view of the Financial Services Agency is that customers should be treated fairly.Until they are, you should look around for yourself every year at renewal time.It is worthwhile and there are significant savings to be had.

 

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