Loyal customers lose up to '£1,000 a year by staying with same insurance companies'

Insurers charge loyal customers up to three times more than new clients to subsidise the low prices and cheaper deals used to attract new business

According to the research, customers who moved their home insurer saved £37 after a year, rising to £78 after five years and about £127 for those who switched after nine years or more (Corbis)

When it comes to your car or home insurance, there seems to be no reward for being loyal and long-standing customers are reportedly losing up to £1,000 a year by not shopping around.

Insurers charge loyal customers up to three times more than new clients to subsidise the low prices and cheaper deals used to attract new business, the Daily Mail reports.

An audit of 9,000 motorists and 8,000 home-owners carried out by Consumer Intelligence for the Daily’s Mail reportedly found premiums steadily increasing with every year customers remain with the same insurance company.

“The data shows that loyalty really doesn’t pay. The longer you’ve been with your insurer the more you are likely to save switching,” Rod Jones, insurance expert at comparison website uSwitch.com told The Independent.

“However, when shopping around don’t forget that price isn’t everything. Make sure you find a policy which provides you with the cover you actually need and is right for your personal circumstances. With motor insurance, don’t assume third party only cover will be cheaper than fully comprehensive as for many motorists this isn’t the case and you could save £100s by taking out a fully comprehensive insurance policy,” he added.

According to the research, customers who moved their home insurer saved £37 after a year, rising to £78 after five years and about £127 for those who switched after nine years or more.

Some customers reportedly discovered they were being charged up to £1,000 more when compared to the cheapest deal on the market - even if their own insurer was the one offering the deal.

When it comes to motorists, those who switched their car insurance after one year saved £63, rising to £81 after five years and about £117 after nine years.

Ian Hughes of Consumer Intelligence said the price rises were imposed to pay for cheaper deals to attract new customers.

“Companies are so fixated on attracting new customers because it is seen as a sign of health that the focus is not on keeping existing ones,” he told the Mail.

James Bridge, of the Association of British Insurers, said: “Insurance is a very competitive market, with many customers shopping around to get the right policy for their needs at the best price. Customers should always remember to buy the policy that best suits their needs, and not simply the cheapest on a price comparison website, or elsewhere.”