Insurers are slamming thousands of loyal customers with up to €300 higher fees

Misplaced loyalty is blamed for thousands of drivers overpaying for their insurance by up to €300 a year.

The ‘loyalty premium’ remains a feature of the motor insurance market, although the central bank recently enacted rules prohibiting insurers from penalizing customer loyalty.

The consumer group has urged the regulator to scrutinize insurance prices, claiming there is little evidence insurers are following rules that seek to crack down on excessive charges for long-term customers.

The call came after it was revealed that drivers who remain loyal to their insurers will be offered a slightly lower premium this year.

However, according to Insuremycars.ie’s Jonathan Hehir, they could cut the cost of their coverage by hundreds of pounds by searching the market for better value for money.

A comparative analysis of the market he carried out revealed that the average driver pays between 170 and 300 euros or more too much for his insurance. Mr Hehir said a mixture of apathy and misplaced loyalty to an insurer is hurting Irish motorists’ pockets.

“We took three average driver profiles and looked at offers from five different providers.

“What the numbers show is that no insurer is consistently the cheapest or the most expensive.”

He said in one case a motorist was offered €656 by an insurer but if they had looked around they could have gotten the same cover for €344.

Mr Hehir said it’s nearly impossible to figure out insurers’ pricing systems.

Some insurers prefer older drivers, some prefer couples, some diesel, some petrol, while others specialize in higher risks, he said.

“Automotive insurance is one of the most fragmented products when it comes to pricing, and quotes can vary widely from person to person and insurer to insurer.”

He said there’s no way the average driver would know which provider was giving them the best deal without having several different deals to compare against.

“Looking around is still relevant when it comes to getting the best deal on the market, especially given that so many of us are finding ourselves under financial pressure from the cost of living crisis.”

A recent survey by the Central Bank of Ireland found that around one in four home and car insurance customers believe that loyalty to an existing provider is rewarded.

“We see too often that drivers who have remained loyal to an insurer are invariably offered a slightly lower premium this year and simply accept it, believing that they are doing really well.

“However, if they went elsewhere, they could save hundreds more.”

Insurance shopping will become even more important this year as auto insurance premiums could rise due to the huge increases in the cost of auto parts and repairs.

It’s only a matter of time before the higher car repair costs trickle down to insurance, Mr Hehir said.

The consumer association has accused insurers of violating central bank rules that prohibit them from penalizing customer loyalty, claiming that insurers are failing to comply properly with the rules.

The ban on loyalty punishment went into effect last summer. It is intended to prevent only new customers from receiving the best prices.

The ban concerns so-called price walking, whereby customers are secretly charged more instead of being rewarded each year if they stay with the same insurer.

Consumers’ Association leader Michael Kilcoyne wants the central bank to probe the insurance industry.