No Rewards For Insurance Loyalty

It becomes ever-more disappointing to realise that there really are no rewards for loyalty any more.

It is well known that mortgage lenders give their best deals to new customers and give very little to customers who have been with them for years.

Now, insurers are also exposed in a similar vein. Some have been found to double premiums for customers who have made only a very small claim. Consumer magazine 'Which?' is very angry about the situation, which flies in the face of loyalty and of the principles of insurance. It is, they say, unfair to loyal customers.

The result is that people are driven to avoid making any claims on their insurance policies at all, just to keep the premiums down. This has been the case for motor insurance for many years, as customers try to protect their no-claims bonus discount. Now it is spreading to other insurances.

What are we left with? Assuming that a claim would have to be made for big disasters - fire, flood, theft, a car write-off - people will probably avoid smaller claims to keep their premiums down. You might as well pay for any damage yourself rather than indirectly pay it back to the insurance company.

Claimants already have to pay an excess - this is supposed to stop spurious claims - but now they're expected to pay more for future premiums too.

Small home insurance claims can result in premiums being pushed up by anything from a third to double, even when more precautions are taken following a claim, such as the fitting of an alarm following a burglary.

According to insurers, claimants are in a higher-risk category.

Even drivers who have to claim through no fault of their own - for example when their car has been scraped in a car park and the perpetrator has driven off without ackowledging, have to suffer higher premiums. It is difficult to understand why they are deemed higher risk.

Anyone who has had to make more than one claim in the last five years will see their premiums rise the most. That applies even if it happens twice to the poor carpark victim.

The advice to policy holders is not to settle for what you're given. If your insurer won't reward your loyalty, then don't show your insurer any loyalty in return! Shop around.

The Financial Services Authority likes customers to be treated fairly, but in this case they said that the insurance provider sets a price in a competitive market and competition is such, that customers should be able to shop around to get a better deal.

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