Insurers could be banned from increasing prices for loyal customers

Insurers may be banned from raising prices for loyal customers as it was revealed six million people face a £1.2billion rip-off.

The Financial Conduct Authority showed how insurers punish existing customers in a report published yesterday.

The average person who keeps the same insurer is losing out on £200 a year.

It proposes to ban or restrict insurers from raising prices for people who renew year on year or it will force firms to automatically move people to cheaper deals.

The FCA’s Christopher Woolard, said: “This is not working for all consumers.”

Insurers could be banned from raising prices for loyal customers (Getty)

In one case, debt charity Citizens Advice found a lady, 89, who was paying £800 for her home insurance, despite living in a small mid-terraced house.

When a shocked family member went online and compared quotes they found the same cover for £300.

The pensioner had been with the same insurer for over five years.

One pensioner was paying £800 for cover that was available elsewhere for £300 (Getty)

Gillian Guy, of Citizens Advice, said: “It’s great to see the FCA pledging to crack down on the loyalty penalty.

Huw Evans, director general, Association of British Insurers, said: “We agree that the insurance markets could work better for consumers.”