It is a common conception that long term customers always get preferential treatment. Recent reports go against this idea in the insurance industry. People report that not only they aren’t appreciated but also they are being taken for a ride by their long term providers. So, having a trusting nature doesn’t pay at all when it comes to buying a policy.
Various authorities have been trying to prevent this blatant abuse. For example, the Financial Conduct Authority in the UK recently came up with new regulations that should have ensured that current customers shouldn’t be charged more than a new applicant would be when their renewals come.
Unexplained Higher Renewal Premiums
However, reports from the UK suggest that companies clearly ignore this and carry on with their usual practices of milking trusting, especially older clientele. In the UK, many people recently received double digit rate increases. The elderly appear to be most vulnerable to being overcharged for their home and car insurance because they are more trusting.
Some policyholders appear to be getting a little discount when they challenge the renewal premium increase. In an attempt to prevent them switching to a competitor, existing carriers are forced to cut their prices back. However, a few still stick to their prices in the hope that they will get more.
In most cases, they don’t offer any explanation as to why they want more money all of a sudden. Inflation may be an explanation. However, this makes the situation worse for the people who have already been cornered by utilities suppliers, supermarkets and other increases in cost of living while their wages and pensions went up well below those hikes.
Would Shopping Around Help?
Some of those people decided to carry out car insurance quotes comparison to see where they stand. Most of them managed to find better deals somewhere else. The most striking result was the fact that they managed to get cheaper rates from their current carriers when they applied as a new customer. This goes to show that you really don’t need to worry about sticking with them.
Why should you when someone with no history with your auto insurance company can get up to 15% cheaper quotes than you. Probably, you can get better deals if you refuse the renewal terms and re-apply to the exact same providers. The worst part is that authorities with all sorts of powers to stop such abuse fail to act time and time again.
Are There Any Benefits to Loyalty?
Many people like to believe so but there is no evidence that your claims will be awarded more generously because you are a long-standing customer. Forget that there is no evidence that they will be dealt with priority. The reason why people like to believe this misconception is that it justifies their laziness. When you believe that your current insurers will give you the best prices and much cheaper than the new customers you don’t feel like you should spare time and shop around.
Now it is clear that the only thing pays is taking nothing granted and shopping around for the best prices at each renewal. Only then they will realize that people walk out the door if they are not fair. Large number of insurance companies rely on their policyholders not checking to see if the renewal on offer is any good.
The above-mentioned report found that people achieved large savings by either forcing their existing carriers to reduce rates or just choosing another one. And the general advice is that never just accept a quote given to you without finding alternatives and comparing them. Then, you know exactly where you stand and what to do about it.