Car Insurance Loyalty Pricing Has Finally Been Banned
In a major win for motorists, car insurance providers will no longer be able to impose loyalty pricing on existing customers…
Loyalty Pricing Banned
For decades, British drivers have been running afoul of so-called loyalty pricing when it comes to their car insurance. This saw the industry prey on drivers who, for whatever reason, chose to stay with the same provider indefinitely. They’d lure in new customers will low fees, only to raise them later on. In effect, customers were being penalised for being loyal to their car insurance providers. Fortunately, the practice was banned on January 1st.
According to the Financial Conduct Authority (FCA) the ban will save drivers a collective £4.2 billion over the next ten years; a testament to just how unfair loyalty pricing was.
‘Fairer and Better’
Sheldon Mills, speaking for the FCA, said “Our interventions will make the insurance market fairer and will make it work better. Insurers can no longer penalise consumers who stay with them”. He added, “you can still shop around and negotiate a better deal, but you won’t have to switch just to avoid being charged a loyalty premium”.
So, drivers should still assess their options when it’s time to renew their policies; doing so means they may get something significantly cheaper. However, if they don’t they won’t be facing a price hike by stealth. The only remaining question is why the industry was able to do something so unjust for such a long period of time.
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