Home insurance companies may be overcharging up to 13 million UK households, new research suggests, with older people particularly hard hit.
A study conducted by Citizens Advice and published on Friday shows that 40 per cent of people over the age of 65 have had their home insurance policy for over five years, which means they could be paying 70 per cent more than a new customer would for the same policy.
The network of charities said that for someone with the cheapest policy for building and contents insurance, this could equate to an extra £110 a year, on average, that they would not be paying if they were a new customer.
Citizens Advice said that charging loyal customers more than new customers had become a “market-wide practice” and that companies often hike prices substantially when existing customers renew their policies.
The research suggests that almost one-third of the entire home insurance market might be paying more than they would be if they were a new customer.
“Home insurance companies are taking advantage of people’s loyalty, and it’s older people who are suffering the most,” said Gillian Guy, chief executive of Citizens Advice.
She also urged the Financial Conduct Authority to crack down on the practice of overcharging.
“Vulnerable customers are the hardest hit and must be protected from this unfair practice,” she said.
Earlier this year, the FCA set out rules to protect consumers by making it a requirement for companies to explicitly inform customers what their premium at renewal was in the previous year.
But Citizens Advice said that many providers are still not fully complying with the rules.
