MoneySuperMarket said that translates to a collective £652.5 million annually for UK motorists who enable auto-renewal, which the price comparison website considers a waste and an avoidable cost. It noted that had these customers shopped around at renewal, they would have instead seen as much as £278 each in savings.
According to the research, 34.8% of motorists allowed their existing insurer to automatically renew their policy at their most recent renewal, with 66.9% paying higher premiums for staying put.
In 2017 the Financial Conduct Authority (FCA) began implementing rules requiring providers to show the previous year’s premium at each renewal so customers can easily compare it to the new price. However, MoneySuperMarket said only 47.6% of policyholders noticed the old premium on their renewal letter.
“The FCA took a step in the right direction last year by insisting on greater transparency on insurance renewals, but we clearly need to keep banging the drum when it comes to insurance, as in this case loyalty doesn’t pay,” commented Kevin Pratt, consumer affairs expert at MoneySuperMarket. “More often than not, new customers get the best deals at the expense of those that don’t switch.
“That’s because insurers want to tempt in new business with lower prices, knowing that inertia will enable them to charge existing customers higher premiums to subsidise the process. After a few short years with the same insurer, loyal customers can end up paying hundreds of pounds more than they would if they shopped around for a better deal.”