City regulator the FCA is finally listening to what A Spokesman Said have been telling you for years - You'd be mad to stay loyal to your insurance providers when you could save huge money by regularly shopping around.
The City regulator is to investigate the pricing of home and car insurance after finding ‘hidden’ discrimination for loyal customers.
The UK Financial Conduct Authority (FCA) is set to investigate the pricing of home and car insurance policies after finding possible discrimination in the industry.
They've launched a formal study saying they believe loyal customers are punished with high prices that help subsidise cheaper deals for new customers.
It has also raised concerns that companies are making higher profits from vulnerable customers.
This won't be news to loyal A Spokesman Said customers though. We've told you many times you'd be mad not to shop around and use a price comparison site like A Spokesman Said to always make sure you're on the best value deals.
The regulator says that it appears insurance customers have to pay various prices depending on their loyalty to a firm, their age and also whether they have an online presence.
The FCA also says that customers’ marital status, home postcode and employment status might additionally affect their premium.
“Our initial work has identified a number of areas of potential consumer harm,” said FCA chief Andrew Bailey. “If change is needed to make the market work well for consumers, we will consider all possible remedies to achieve this.”
The Association of British Insurers’ Hugh Savill said: “We agree that the market is not working as well as it should for some long-standing customers.”
The Citizens Advice has also spoken out to warn that loyal customers might be being ‘ripped off’.
It in fact launched a super-complaint, stating that many consumers who stay with the same energy supplier for many of their household need could be losing in total £1.4 billion each year. This amounts to an average figure of £877 per person.
This means that not shopping around could potentially put people out of pocket by hundreds of pounds.
In the industry, this is known as ‘price walking’, and it means the cost of insurance each year is increased as the customer stays with the same company.
Eventually, this leads to their policy being much more expensive than a new customer’s would be.
The FCA state that 82% of adults in the UK have one or more general insurance products. The insurers generate a £78 billion from these premiums.
This means there is a significant price competition for new customers, as new policies actually offer rates that can be 30% lower than the cost of providing the policy. However in the second and third years, these policies rise in cost.
The FCA are now set to investigate the pricing system and time will tell if consumers will benefit from any changes made by the regulator to the way the insurance schemes are priced.
In the meantime, don't wait for the FCA to help...help yourself, and check out the comparison tools at A Spokesman Said to search for the best deals for all you insurance products.
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