MILLIONS of households could see their car and home insurance bills rise under a rules shake-up rolling out in two weeks.In the new year, insurers will not be allowed to charge existing customers who are renewing their policy more than new customers’ deals under the rule change.
1Half of households have seen their insurance premiums increase when sticking with their existing providerCredit: Alamy
Industry watchdog the Financial Conduct Authority announced the shake-up in May this year, which aims to tackle the “loyalty” penalty which sees firms offer better deals to new customers.
This penalty sees existing customers pay more for their deal as a result.
The new rules will come into force from January 1 2022 – and the FCA estimates Brits could save £4.2billion over 10 years because of the changes.
While it will be good news for old customers who get their policies automatically renewed, some experts have warned it could hit new customers shopping around for a better deal.
When hunting for a better policy, new customers will be given the same quote as they would give to old customers who have renewed theirs.
But Hargreaves Lansdown senior personal finance analyst Sarah Coles said: “It’s good news for those who stick with one provider, but it’s likely to mean the end of very cheap deals for those who are prepared to keep switching.”
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She added that the rule shake-up, however, will prevent insurers from raising prices every year after tempting you in with a bargain deal.
There are no prizes for loyalty when it comes to insurance.
You can end up paying hundreds of pounds more for your home and car insurance if you let your policy auto-renew with your existing provider.
Research by comparison website Compare The Market has found that people risk paying more than £450 …
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