Money Saving Expert Martin Lewis has issued an important message to consumers ahead of big insurance changes which will see ‘loyalty premiums’ scrapped.
The rule change will come into place next year and will ensure home and car insurance providers will be banned from charging existing customers more than new ones.
Existing customers who renew every year are often charged more by insurance providers because they know they will stay, reports the Mirror.
But, on Thursday night’s instalment of the The Martin Lewis Money Show on ITV, the consumer expert said such ‘loyalty premiums’ will soon be no more.
He said the rule change will affect “car, motorbike, van and home insurance” and that it would mark “the end of price walking”.
“That means if you automatically renew your policy, your insurer will no longer be able to push up the price year after year,” he added.
Sign up to our breaking news Facebook group
We’re first for breaking news in Yorkshire – and now we have a Facebook group where you can keep up to date.
Join Breaking News and Incidents in Yorkshire to get the latest breaking news and post there if you see an incident you think is worth us covering
Lewis said it’s likely that existing customer prices and new customer prices will meet in the middle – meaning there could be less competition.
“In other words, the savings are going to drop dramatically for people that compare and save each year,” he explained.
The changes kick in in January but Lewis warned many insurers will start to update their prices to reflect the law change in the next month.
“That means the window of opportunity to bag a cheap deal is now.”
Energy crisis – options for avoiding huge bill
The UK is in an energy crisis following the price of gas which has rocketed in recent weeks.
Many energy suppliers are out of business which has prompted warnings of food shortages in UK supermarkets.
Householders are being warned that anyone coming off cheap, fixed energy deals could be in for a huge price hike, even on the cheapest tariffs. To avoid a potential price hike in energy bills customers can:
Here are some of Ofgem’s suggested comparison sites:
Issuing advice to viewers, he said it’s worth checking if you can save – even if your renewal policy is six months away.
“If you do find you can save substantially, start a new policy, cancel the old policy and ask for a refund on the outstanding time period.
“Providing you have not claimed, you should get a pro-rata refund minus around £50 in admin fees.”
If you’re near renewal, he says the perfect time to get quotes is 23 days before your car insurance policy expires, or 21 days for home insurance.
“The reason for this is that if you leave it until later, insurers categorise you as a higher risk person and charge you higher.”
Lastly, he shared some advice for those shopping around.
“Two different comparison websites could have different prices for different insurers, so use two or more. Some insurers like Direct Line are also not on comparison websites, so check these individually,” he said.
“And if you want to stick to your provider, find the cheapest deal and contact them to match it or haggle it lower.”
Those on the hunt for a lower deal may be able to save more through a cashback website such as TopCashback or Quidco. Some pay up to £70 when you join through them.
“Lastly, insurance policies are like loans, so pay upfront, and you’ll pay the least.”
New ‘price-walking’ rules from January 2022
Many firms increase prices for existing customers at renewal in a practice known as price walking.
They use sophisticated processes to target the best deals at customers who they think will not switch in the future and will therefore pay more in the long run.
It’s part of the reason why people are encouraged to shop around and switch every year.
Enter your postcode for live traffic and travel updates where you are
At the same time, these companies are offering below-cost prices to new customers to lure them in.
The FCA’s new rules will ban price walking from January next year.
The law change will protect people from the so called ‘loyalty premium ’. In a nutshell, it means your renewal price will not be higher than it would have been if you joined the same company as a new customer.
It said these measures will save consumers £4.2billion over 10 years.
To get the latest email updates from Yorkshire Live, click here .
This content was originally published here.