Why Loyalty Does Not Pay for Car Insurance Customers

More than six million people have switched car insurance provider during the past six months in a bid to beat rising premiums, research showed.

Around 14 per cent of people said they had changed insurer when their policy came up for renewal, according to financial website MoneyExpert.com.

The group predicts that car insurance firms will hike premiums by around 10 per cent this year due to rising claims costs.

But it said insurers were still able to offer discounts to new customers, by raising the cost of cover for existing ones.

Sean Gardner, founder of MoneyExpert.com, said: "When it comes to car insurance, loyalty does not pay. The only way that car insurance companies can offer discounts and incentives to attract new business is by passing on the extra cost to their existing customers.

"Have you ever wondered why your renewal notice always seems to rise slightly compared to the competitive quote you got initially? It's because you're paying for someone else's cheap deal."

The group estimates that around 35,000 people are switching car insurance provider every hour, saving up to 30 per cent by shopping around for the best deal.

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