/ Money

Why do premiums go up for loyal customers?

Teddy in car

Hands up if you like paying insurance. No? I didn’t think so. You might stick by them for years, diligently renewing your policy, but what do you get for all your loyalty? Zilch.

Unless you make a claim you’d think your insurance premium would drop after a year. Partly because you’ve proven to be less of a risk and partly to reward your loyalty. But in reality this isn’t what happens. Instead, your premium goes up!

We recently had an email about this from a frustrated Which? Convo reader. He found it absurd that companies continuingly increased their premiums the longer he was with them.

A cynical industry

I think the insurance industry is pretty cynical. It’s mainly interested in attracting new business, snaffling new custom from the competition by offering particularly attractive premiums. And it can afford to be generous, because it relies on existing policyholders accepting their renewal quote, no questions asked.

When Which? reported on the cost of car insurance recently, we found that the average renewal premium rose by £12. Of course, the insurers will tell you that times are tough and their margins are slim, or that the cost of reviewing and maintaining policies is expensive. Or even that rising premiums are down to an increasing number of cars on the road (which are surely insured, so that one doesn’t wash).

Oh, and then there’s the general poor state of the economy, which makes life difficult for them since the stock market – where they invest your cash – isn’t performing as well as they’d like.

Vote with your feet

But that’s all rubbish. They’re on to a good thing and they know it. According to our research, a third of drivers accepted their insurance premium because they couldn’t be bothered to shop around.

That’s the real reason your renewal quote is so disappointing. And this makes for a very good reason to spend a little time looking around for a better deal. It may be their game, but we all play it too, so vote with your feet and move on.


Though I agree in principle – One needs to consider “No Claims Bonuses” in detail – as well as the small print in each insurance contract..

I have been with my Insurance Company for around 50 years – I have a “guaranteed” NCB of 75% – which means whatever happens the NCB is fixed. I can’t transfer the exact conditions of my NCB to another Insurance Company – They seem to offer “warranted” NCB instead (not the same) though I doubt if many would realise it – Which means if you crash twice you lose the NCB. Losing my NCB would mean my premium would be astronomical.

Now if we remove the one million drivers without insurance from the roads – Our premiums should go down.

pickle says:
11 October 2010

I’m not altogether in agreement with Richard – when moving insurance to anther firm your details are shared with the new firm – so – NCB’s go with the insurance. Often the threat to move is enough to get the premium down a bit. I am in favour of searching the market when renewing – you might be lucky – you might not….Another thing, check the selected firm for reliability. Often a local firm will be cheaper.

Sorry you missed the point – My particular NCB is completely independent of the number of accidents I have in the future – but most other NCBs are not for other companies – If it is “warranted” it means the insurance company will remove it if you crash – mine is secure however many crashes I have,

Both are “called” No Claims Bonuses – but they are in fact different – I wasn’t aware of this until I was going to change my Insurance Company as others “appeared” cheaper – Their overall conditions were far worse.- so I stayed with my original company.

I was quite shocked when I got my car insurance renewal quote last year – despite having no claims for a year the premium had almost doubled! I shopped around and got a decent deal for a lot less. I always thought that having no claims meant your next premium would go down… clearly not.

Fair enough if prices do have to go up a bit, but to charge a loyal customer almost double the original price in the space of a year doesn’t make good business sense – I can’t imagine anyone staying on those terms.

I want to tell you about my recent experiences with car insurance. Three years ago a car I drive was involved in a minor accident with my 23 year old son being the driver. The renewal came up and the discount was knocked down to 3 years and the policy premium had rocketed. I changed to More Than
as it was a much cheaper policy with my son as a named driver the year passed with no claims. Renewal comes up with no cover for my son no reason given. I rang them and to this day was given a non sensical anwer which to this day remains, when I said why did you cover him at 24 but won’t at 25? Changed to another insurer with 4 years no claims. Renewal has recently been quoted by the same company 5 years no claims and 50% higher than last year.
Went online and found present insurer cheapest of all the quotes. Rang up before and was told renewal department closed to next day, I am not suprised, well if they don’t match their online quote I will be voting with my feet. As Dan says you are given a lot of waffle and lets be honest you dont know whether they are any good until you have a claim and then its too late

Derek says:
17 October 2010

Insurance companies have no interest in customer loyalty whatsoever, I was until this month insured with the cis and had 8 years ncd, when I saw my renewel premium for the next year, I shopped around and saved nearly £200.00 pounds for the same level of cover, so it was goodbye to the cis, they did the same to my son when he changed his vehicle for a new one, they wanted nearly £700.00 pounds, he is now paying just over £300.00 pounds for the same level of cover.

wrt NCB protection am I right in thinking that the protection element only applies if you remain with your current provider? If you haven’t had to make a claim at all then the NCB period does transfer to a new provider. But, if you have NCB protection (regardless of whether it is for ‘protected’ or ‘guaranteed’), and then you have an incident that would otherwise have resulted in a claim, if you then change provider your new company will see this incident as ‘claimable’ incident and your NCB period will be adjusted. Surely they’re not interested in whether you had your NCB protected or not with your old provider.

Is this correct?

As far as I can tell Yes

My NCB is guaranteed meaning I don’t lose it however many accidents I have with my Insurance company – but if I transferred to another Insurance company – then the NCB will have the same conditions as any person insured with the new company.

As far as I was concerned I had no idea that the conditions of the NCB were in any way different from one company to another.

In all honesty if I lost my NCB I would change my insurance company to the lowest possible (within reason)