Loyal motorists penalised as car insurance prices drop for new customers

Research finds 55% of drivers who renewed their car insurance between January and March this year (2019) saw their renewal premium go up by £46, on average(1)

Posted on 15 Apr 2019

Confused.com price index reveals car insurance now costs £762 on average, as those who are shopping around benefit from -£12 cheaper price compared to three months ago.
New expert report reveals how consumers are being affected by the loyalty penalty, which is costing a total of £4.1bn(2), according to recent investigations by the Financial Conduct Authority (FCA)(3) and Competitions and Market Authority (CMA)(4).
Additional research(5) found motorists stay with their insurer for three years, while those who switched at their last point of renewal saved £81, on average. 
Louise O’Shea, CEO at Confused.com, urges drivers to check their renewal price and shop around before committing to renewing as insurers fail to reward loyalty.
Women switch insurers more regularly suggesting they are better at seeking out a cheaper price, as the gap between premiums for men and women reaches £96.

Being loyal is something to be celebrated, but not if you are a motorist, a new report reveals.

New research by Confused.com revealed loyal motorists are being penalised when renewing their car insurance, while those shopping around for a better deal are benefitting from cheaper prices.

According to the nationally representative survey of UK drivers, more than half (55%) of motorists who renewed their car insurance in the last quarter (January-March 2019) saw their premium go up by £46 when they opened their renewal notice(1), on average. This suggests insurers are failing to reward loyal customers. Although, worryingly, nearly three in five (58%) drivers who renewed their insurance during these months stayed with the same insurer, suggesting they did not seek a better deal elsewhere.

Meanwhile, new car insurance price data suggests that prices for new customers is in fact decreasing. That’s according to Confused.com’s car insurance price index – the most comprehensive car insurance price index in the UK based on more than six million quotes a quarter powered by Willis Towers Watson. The data reveals the average price of car insurance dropped -£12 (-1%) over the past quarter (Q1 2019) suggesting those who are shopping around are making savings. The average price of car insurance in the UK is now £762. While these increases are small, it is in fact the lowest annual price decrease since 2015.

It’s clear drivers who are not looking elsewhere for better car insurance costs are paying the price. To explore the issue in more detail, Confused.com has created an expert report into consumer loyalty, which looks at how UK motorists who rent or own their home are loyal to their providers, and how much this has potentially cost them. 

The Confused.com report comes in the wake of investigations by the Financial Conduct Authority (FCA)(3) and Competition and Markets Authority (CMA)(4), which are unveiling ‘loyalty penalties’ being charged to customers who choose to stay with the same provider, rather than shopping around. It is reported this has cost consumers an eye-watering total of £4.1bn a year(2)

According to the report, consumers stay with their providers for more than four years, on average(5). Although, it seems people are less loyal to their car insurance provider than the average, staying with their insurer for only three years in comparison. However, this is possibly still two years too long, as it’s clear that loyalty does not always pay when it comes to car insurance. In fact, drivers who switched car insurance providers the last time at their last point of renewal were able to save £81, on average, the research found.

And as the UK is set to enter a period of economic uncertainty, Louise O’Shea, CEO at Confused.com is urging drivers to check their renewal price and shop around to find a better deal. Even if a renewal price is cheaper year-on-year, it’s likely there will be an insurer out there willing to offer a better price. But its clear loyalty does not always pay, so Confused.com is giving motorists the chance to save even more by guaranteeing to beat their car insurance renewal price, or give them the difference, plus £20(6).

It seems female drivers are less loyal to their car insurance provider and are more likely to switch more regularly than men. According to the research, female motorists are only likely to stay with their car insurer for 2.9 years, compared to men, who will switch after 3.3 years, on average. And this is perhaps one reason why female drivers pay £96 less for their car insurance than men, suggesting they are better at seeking out a better deal. According to Confused.com’s car insurance price index, male drivers pay £805 for their car insurance, on average, compared to the £709 paid by women. 

While the EU gender directive prohibits insurers from assessing a driver based on their sex, there are other risk factors which cause men to have higher premiums(7). For example, men tend to drive more expensive cars with larger engines and loaded with new technology, on average, which makes for higher-value claims. They also tend to have significantly more motoring convictions than women, as highlighted in Confused.com’s ‘Gender Gap in 100 Drivers’ research. However, it is unclear whether these laws will remain post-Brexit, which could result in the gap widening to the same scale seen before the EU Gender Directive was introduced, where men were paying up to £121 more for their car insurance (Q4 2011).

And it is not just female drivers who may be benefitting from their disloyalty. In fact, younger motorists (18-24) saw the biggest savings when shopping around, according to the research, saving £169 by switching at their last point of renewal, on average. But, according to the price index, younger drivers are still being stung by their cost of car insurance. In particular, 18 year olds have the most expensive car insurance costs, paying an eye-watering £2,081, on average. This is following an +£98 (+5%) price increase over the past quarter, on average. This is the steepest quarterly increase seen by any age group. Similarly, prices for 19 year olds increased at a rapid rate, adding an extra +£61 (+3%) on to the average premium, which now costs £1,914. And this acceleration in prices means 17 year olds are paying less than both 18 year olds and 19 year olds for the first time on record. Drivers of this age pay £1,905, in comparison.

Meanwhile, older drivers are benefitting from the cheapest car insurance prices, even though they are less likely to shop around. According to the research, drivers aged 45+ stay with their car insurance provider for 3.3 years. Yet, motorists within this age bracket pay anywhere between £431 and £667 for their car insurance, on average, which is significantly cheaper than the average UK driver. In particular, 66 year olds have the cheapest car insurance costs of all, paying just £431, on average.

Looking to the regions, perhaps being disloyal may help some motorists to bring their costs down. While prices across the UK have dropped slightly over the past year, motorists in Central Scotland are among the few which will have seen their price increase compared to 12 months ago. The average price of car insurance in the region climbed by +£10 (+2%) year-on-year to £663, despite a mere -£6 (-1%) drop in price over the past quarter. Similarly, prices in the South East of England climbed by +£8 (+1%) year-on-year and is the only region to have seen any price increase over the past quarter (+£1 / 0%). 

No doubt, all motorists would do all they can to save money on their car insurance, but perhaps none more so than those in Inner London. The average price of car insurance in the region dropped slightly (-£16 / -1%) to £1,153 over the last quarter (Q4 – 2018 Q1 2019), but remains the only region paying more than £1,000 for car insurance.

While car insurance prices are slowly decreasing, drivers are feeling the pinch of other motoring costs. According to Confused.com’s fuel price index(8), the cost of petrol and diesel is starting to creep up following a short period of respite. In particular, the cost of petrol has increased 1.1p in the past week alone, reaching 123.1p per litre, on average – costing owners of a medium sized car £70 for a full tank. Meanwhile, the cost of diesel has climbed 0.3p to 130.9p per litre, on average, and £75 to fill in medium sized car.

While motorists cannot always avoid the cost of fuel, it’s clear shopping around will help to reduce the cost of car insurance prices. And this trick does not just apply to car insurance, with savings there to be made across different types of utilities or services. Confused.com’s expert report dives deeper into consumer shopping habits which proves why loyalty does not always pay. 

Louise O’Shea, CEO at Confused.com comments: “Car insurance is just one of many ‘invisi-bills’ people resent forking out for. But it’s clear many drivers become overwhelmed when their renewal date comes around. As a result they aren’t taking the opportunity to shop around and find a better deal.

“Recent investigations by CMA and FCA have found consumers are being overcharged by a collective £4.1bn just by renewing with their current provider. This concerns me because I know there are savings to be made, especially with car insurance. There is always another insurer out there willing to offer you a better deal, even if your year-on-year renewal price is cheaper. At Confused.com, we are so certain of this that we are offering to beat customers’ renewal quotes, or give them the difference, plus £20(6).

“People shouldn’t be paying more than they have to. Drivers should check their renewal letter, find out how much they paid last year, then shop around to get a cheaper price.”

- ENDS -

Notes to Editors:

More than six million quotes are used in the construction of each quarter’s insurance price index - this makes it the most comprehensive insurance index in the UK. Unless otherwise stated all prices referred to are for comprehensive cover.

The following web pages will be updated to reflect the new figures and can be linked to: http://www.confused.com/car-insurance/price-index

Unless otherwise stated, statistics obtained from a nationally representative survey of 2,000 UK motorists who rent or own a house, carried out by One Poll on behalf of Confused.com. The survey ran between 21/12/18 and 03/01/19.

1. Statistics obtained from a nationally representative survey of 2,000 UK motorists carried out by One Poll on behalf of Confused.com. The survey ran between 02/04/19 and 04/04/19.
2. https://www.gov.uk/government/news/cma-to-investigate-loyalty-penalty-super-complaint https://wearecitizensadvice.org.uk/loyal-consumers-are-being-ripped-off-to-the-tune-of-4-1-billion-2d5ec385541c
3. https://www.bbc.co.uk/news/business-46042087
4. https://www.gov.uk/government/news/cma-to-investigate-loyalty-penalty-super-complaint 
5. Statistics obtained from a nationally representative survey of 2,000 UK motorists who rent or own a house, carried out by One Poll on behalf of Confused.com. The survey ran between 21/12/18 and 03/01/19.
6. https://www.confused.com/beat-your-renewal. Must be a like-for-like policy. Terms and conditions apply.
7. Car insurance for men is on average higher than for women, for example because certain male-dominated occupations are higher risk to insurers, which is reflected in the premium charged. Also, on average, men drive larger and more costly vehicles. For example, according to Confused.com’s quote data, the average female driver’s car has a 1500 cc engine, compared to 1800 cc for men. Women are most likely to quote for an engine between 1200-1600 cc, men are most likely to quote for a 1600-2000 cc vehicle. Men have twice as many motoring convictions as women. Men drive, on average, vehicles around 10% older and more expensive than women. When men make claims their value averages 15% more than women.
8. Confused.com’s fuel price index collates prices from 7074 out of 8496 fuel stations across the UK. Prices are updated every week: https://www.confused.com/on-the-road/petrol-prices/fuel-price-index. 

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About Confused.com

Launched in 2002, Confused.com was the UK's first digital marketplace for car insurance and is one of the leading brands in the sector, generating over one million quotes per month. It has expanded its range of comparison products over the years to include home insurance, van insurance, motorcycle insurance, and car finance comparison, as well as a number of tools designed to save consumers money.

Confused.com is not a supplier, insurance company or broker. It provides an objective and unbiased service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com’s service is based on the most up-to-date information provided by UK suppliers and industry regulators.

Confused.com is the largest company in the Penguin Portals Group, which is the largest group of its kind with similar operations stationed across the world. Penguin Portals Group is owned by the Admiral Group plc. Admiral listed on the London Stock Exchange in September 2004. Confused.com is authorised and regulated by the Financial Conduct Authority.

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If your enquiry is time-critical, please write "URGENT" in your email subject line. If you would like a ring-back, please include your telephone number. 

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