More than a third of drivers hit by insurance ‘loyalty tax’

Millions of drivers could be paying too much for their motor insurance because they don't shop around for cheaper cover.

A survey of 2000 drivers by comparison website MoneySuperMarket found that two thirds (67 per cent) of motorists had seen a £40 increase in the cost of a fully comprehensive policy over the past 12 months, while over a third (35 per cent) said they routinely allow their policy to auto-renew without looking for a better deal.

A similar poll by GoCompare found that 27 per cent of drivers have been with the same insurer for three years or more, while those who pay for their car insurance in monthly instalments are 54 per cent more likely to allow their cover to automatically renew than those who pay annually.

A report by data analytics company Consumer Intelligence found that 51 per cent of drivers could save at least £259 by shopping around for car insurance. 

These worrying trends follow a 2018 report by data analytics company Consumer Intelligence that found 51 per cent of drivers could save up to £262 by shopping around for car insurance online. 

In April 2017 the Financial Conduct Authority (FCA) launched the auto-renewal bill, which forces insurers to clearly show the previous year’s premium at each renewal so motorists can easily compare it to the new price. However, despite the new rules, millions of drivers allow their policy to roll-over without shopping around for a cheaper premium.

Emma Garland, data scientist at MoneySuperMarket, said: “Despite significant cost savings to be made by switching insurer, over a third of drivers still allow their policy to automatically renew.

“Not only is this costing people millions of pounds a year at a time when insurance premiums are on the rise again, it also highlights that the FCA’s legislation hasn’t had a huge impact on consumer behaviour."