Research from Citizens Advice has found that home insurance companies make 100% of their profits from the loyalty penalty. This is equivalent to more than £1bn per year. If you are a loyal customer and let your home insurance renew automatically, you are directly putting your cash into the pockets of company shareholders.
We recommend you switch your insurance annually.
If you are a loyal home insurance customer and in your 6th year of renewal, you will pay on average £325. If you are a new customer in your 1st year of cover you will pay on average £172. The difference is their profit. According to Citizens Advice, a quarter of all home insurance customers have been with the same home insurance company for seven or more years.
Furthermore, Citizens Advice has highlighted that providers generate more than 50% of their annual profits from vulnerable customers. Research demonstrates that customers who are vulnerable due to issues of bad health are most likely to be paying more for their home insurance.
The research cited a case of a 76 year old pensioner whose premium increased from £1,500 a year to £3,500 a year. She didn’t have access to the internet so she resorted to using Yellow Pages to call home insurance companies. There, she found a cheaper premium of £958 a year. This should shock everyone. Home insurance companies are exploiting vulnerable customers.
BillsDashboard was set up to help customers avoid these kinds of issues. People with elderly parents are encouraged to help set up a dashboard of their bills. Set up shared access of the account. You can then keep an eye on what your vulnerable family members are paying.