Citizens Advice reveals home insurance companies are routinely overcharging older people, potentially £110 a year

New research published today suggests home insurance companies are overcharging up to 13 million households in the UK simply for renewing their existing policy.

Polling conducted on behalf of Citizens Advice found that older people are especially vulnerable to these additional costs.

40% of people over 65 have had their home insurance policy for over 5 years, which means they could be paying 70% more than a new customer would for the same policy. For someone with the cheapest policy for buildings and contents insurance, this could be an extra £110 a year, on average.

Research from Citizens Advice confirms charging loyal customers more than new customers is a market-wide practice, with companies often making large hikes in premiums when customers renew their policies.

Almost one third of the entire home insurance market could potentially be paying 70% more than a new customer for the same policy.

Earlier this year, the Financial Conduct Authority set new rules to help consumers by making it a requirement for companies to explicitly inform customers what their past year’s premium was at renewal. However, many home insurance providers did not fully comply with the regulations.

Our research shows vulnerable groups such as people with mental health problems, those on low incomes and disabled people were less likely to engage with the home insurance market when their policy was up for renewal.

Home insurance policies and premiums are already complex for consumers to understand. Only half of home insurance customers surveyed were confident they could identify unfair charges in their premium.

Citizens Advice is calling on the Financial Conduct Authority and insurance providers to  work together to identify and protect vulnerable consumers from the loyalty penalty.

Gillian Guy, Chief Executive of Citizens Advice, said:

“Home insurance companies are taking advantage of people’s loyalty, and it’s older people who are suffering the most.

“The Financial Conduct Authority must stop home insurance providers overcharging customers. Vulnerable customers are the hardest hit and must be protected from this unfair practice.”

-ends-

Notes to editors

1. Citizens Advice has previously confirmed a loyalty penalty in energy, broadband, mortgage and mobile markets.
2. Populus interviewed a random sample of 4,162 UK adults aged 18+ from its online panel between 18 -28 August. Surveys were conducted across the country and the results have been weighted to the profile of all adults. Populus is a founder member of the British Polling Council and abides by its rules. Further information at www.populus.co.uk.
3. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
4. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
5. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
6. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
7. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
8. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.