Motorists are being charged more money by being loyal to their car insurer, warned a watchdog.
New figures have been released which show just how customer loyalty is being exploited by certain insurance firms.
James Daley, of the consumer group Fairer Finance, said to This Is Money: “The more loyal a customer is, the more they get ripped off and the higher price they pay.
“This isn’t easy to solve.
“Price-comparison websites create fierce competition for new customers, and firms are looking to recover the money they lose on cheap introductory offers by getting it from customers who stay with them.”
Car insurance companies can hook in motorists with an attractive first year deal before increasing prices year on year.
The report suggests that the longer the amount of time you spend with the same company, the more you will be penalised.
On average a motorist that shops around can save around £64 a year.
Number of years with an insurer and the average amount you’re expected to save:
- One year: £64.49
- Two years: £65.47
- Three years: £77.92
- Four years: £77.91
- Five years: £96.53
- Six years: £88.93
- Seven years: £63.54
- Eight years: £130.83
The Financial Conduct Authority (FCA) said that a motorist that doesn’t swap for eight years could find themselves paying an extra £131.
A spokesman for the Association of British Insurers said: “Three quarters of customers benefit from shopping around, but we accept there needs to be a better balance between the deals offered to new consumers and the interests of long- standing customers.
“Insurance is the only sector to have already taken voluntary, industry-wide action to tackle these concerns, and we are working constructively with the regulators.”