That's despite FCA laws designed to promote switching.
British drivers collectively waste more than £565 million a year by sticking with their car insurance provider despite laws intended to promote switching, new research has found.
Almost two years after the Financial Conduct Authority (FCA) introduced rules that forced insurers to be transparent about so-called ‘loyalty tax’ price hikes, a study by consumer website MoneySuperMarket found that more than a third of drivers are still allowing their policy to auto-renew without shopping around for a better deal.
The FCA’s rules were designed to show drivers how much their insurance was rising and to encourage switching policies to find better deals. But MoneySuperMarket’s survey of 2,000 adults found that 35 percent of motorists – equivalent to roughly 14 million – are still sticking with their insurer.
That’s despite the fact that two-thirds (67 percent) of drivers saw their premiums rise when renewal date came around, with the average premium increasing by £40. According to MoneySuperMarket, though, more than half of consumers could save as much as £259 by switching to a new provider.
Emma Garland, a data scientist at MoneySuperMarket, said the FCA’s legislation clearly wasn’t making much difference to consumer choices.
“Despite significant cost savings to be made by switching insurer, over a third of drivers still allow their policy to automatically renew,” she said. “Not only is this costing people millions of pounds a year at a time when insurance premiums are on the rise again, it also highlights that the FCA’s legislation hasn’t had a huge impact on consumer behaviour.
“No matter when your insurance is up for renewal, it pays to shop around and find a better deal. By taking out a policy with a different insurer you could save up to £259 on your premium, which for many people is probably the next four tanks of petrol.”
In a bid to find out how insurance companies could persuade drivers to join, MoneySuperMarket asked its respondents why they chose their insurers. Almost two-thirds (64 percent) said price was the deciding factor, while a fifth (21 percent) chose a brand they trusted. A noticeable 18 percent, meanwhile, said their choice was influenced by brands they “liked the look of”.
Younger drivers proved the most likely to be influenced by advertising campaigns, with six percent of 25-24-year-olds attracted by brands with good advertising campaigns, while five percent said they were enticed by free gifts. Those over the age of 55, meanwhile, were more likely to choose insurers based on trust, with 25 percent claiming to go for reputable and trustworthy brands.