Millions of drivers have been with the same car insurer for 10 years or more – and are likely to be overpaying by millions of pounds a year.
A sense of loyalty has kept 2.1 million drivers, or 6 per cent of all motorists, with the same car insurer for the past decade, according to research by comparison website GoCompare.
But sticking with the same insurer means drivers may be paying hugely inflated prices for their car insurance – despite recent help from the financial regulator.
GoCompare found that the older generation are less likely to switch their car insurance.
Around 12 per cent of those aged 65 or more said they have been with the same car insurer for more than 10 years.
No reward for loyalty: Drivers who stick with one insurer are likely to be overpaying, and this is especially true for motorists who did not shop around prior to January 2022
Not switching car insurance costs drivers an extra £675 million every year in needlessly high premiums, according to rival comparison firm Compare The Market.
The GoCompare research also found that a quarter (26 per cent) of people stuck with the same insurer due to loyalty.
For those aged 65 and over, nearly half (47 per cent) said loyalty was the reason they stuck with their insurer.
Nearly one in five drivers (19 per cent) let their car insurance automatically renew with the same insurer, without shopping around. This group say this is because they found switching a hassle or difficult to do.
GoCompare car insurance expert Ryan Fulthorpe said: ‘Those 2.1million people could be losing out not only on financial savings, but also on improvements to their insurance cover.’
Shop around to save money on car insurance
There is no substitute to shopping around for drivers who want the best prices on car insurance.
Until January 2022, drivers faced paying much more for car insurance if they did not switch away from their insurer at the end of their 12-month term.
This insurance ‘loyalty penalty’ came about because insurers would normally offer new customers low prices to entice them to sign up, and would make up the difference by charging loyal customers more.
But last January the Financial Conduct Authority regulator banned this practice, saying insurers could no longer charge their loyal customers more than new ones.
In practice this has removed part of the incentive for drivers to shop around, as they will not face the same steep price hikes when their policy gets automatically renewed.
But a driver’s current insurer may not be anywhere near the cheapest in the market, meaning shopping around is still the best course of action.
Fulthorpe added: ‘Although the General Insurance Pricing Practices brought in by the Financial Conduct Authority last year are now in place, they only protect the price that a driver would have from the same provider, by ensuring that a renewal price is the same price that a new customer with the same risks would receive.
‘By not shopping around drivers aren’t allowing other insurers to assess their risks and offer an insurance policy.’
