An investigation into insurers' practices has been launched by the Competition and Market Authority following a 'loyalty penalty' super complaint by the Citizens Advice Bureau.
The report produced by the CMA highlights widespread malpractices by insurance companies, which, bizarrely, affect loyal customers in particular. The types of insurance that have been identified as most guilty of ripping people off over time are mobile, broadband, cash savings, home insurance and mortgages. Home insurers in particular were found to overcharge loyal customers, often raising their premiums in 'stealth increase' mode without them knowing. One case involved a couple in their 90s overpaying their insurance premiums by a staggering £1,000 a year. By contrast, new customers were less likely to be affected, offered attractive initial deals.
The CMA have responded with a package of reforms, which will be outlined in detail on their Consumer Forum in six months' time. In the meantime, how can you avoid excessive insurance charges?
Although no one should have to do this, you are likely to benefit from phoning your insurance provider, querying any charges you think are excessive. If possible, get a quote from a different provider, or use an online tool such as Compare the Market to get an idea of what your insurance should actually be. Taking out new insurance? Read the terms and conditions in your contract very carefully, as some unscrupulous insurers rope customers into contracts that are difficult to terminate.
Finally, as with any other type of insurance, it's worth remembering that home insurance may well be mainly for your peace of mind if you live in a low-crime area. Although no one is guaranteed from burglary/accidental damage, if you have taken reasonable security precautions (think securing your door with the best possible lock and installing a security camera), home contents insurance may be unnecessary.
And, while we're on the subject of excessive (and unregulated) premiums, how much do you pay for your antivirus software? The CMA has promised to investigate antivirus providers next, so it may be time to check your bank statement for your annual software renewal bill.
Read our comprehensive guide to home insurance and buildings insurance to find out more.