Today, (January 1st 2022) after years of consumer complaints, new pricing regulations are being enforced by the Financial Conduct Authority (FCA).
The upshot of these new regulations is that when your home, car or pet insurance is up for renewal, the insurance companies cannot charge you more than they would a “new customer” for the exact same policy.
We have all seen the adverts enticing new customers to an insurance company, with offers of discounts and incentives. Those discounts can often be up to 30% less than the normal price, but in the following years the premiums can increase quite significantly and were renewed automatically annually. The auto renew is not being abolished, partly due to the worry that consumers may find themselves without insurance, and they have deemed making customers opt into a renewal, also a negative trait. Companies are however supposed to make it much easier to cancel the auto renewal.
With insurance, people seem to fall into two main categories; those that just carry on with the same insurer because it means they do not have to do anything; and those that every year will use a comparison website to get the cheapest deal out there. This change in the way policies will be sold from now on, will mean that people who have been with their insurance company for years, and have seen their premiums rise year on year, should be better off. Those that use the comparison websites every year to find the cheapest solution, will not find such offers as before, since it’s these discounted introductory offers to new customers, that have be banned.
All is not lost though, as places like comparison websites can offer vouchers for places like Amazon or M&S, if you buy through them. Also remember that, although companies are charging premiums to new customers at the same cost as existing ones, it does not mean that the company you are with at the moment, is the cheapest. Comparison websites are therefore a convenient way to check policies from different companies, to see not only the price comparison, but also to compare the cover of policies. It is always a good idea to check your policies to see what features they contain, as you may be paying for extra add-ons that you never knew, or would ever take advantage of. For instance, if you have mobile phone insurance and other electrical insurances, taken out when initially buying items, you might not need high personal possession cover with your home insurance. Please also be aware that any event history, or pre-existing conditions, that arose during your current insurance, may not be covered if you swap insurers.
To save money, a one off yearly paid premium in advance, is usually cheaper than those that allow you to pay monthly. If funds are a problem, an option might be to purchase the insurance using a 0% purchase credit card. That way you can still pay it back monthly but take the advantage of the reduced initial cost.