How insurers charge loyal customers more than new ones

Category: Insurance
Contexts: Renewing insurance, Buying home insurance
Reading time: 4 minutes · Published

What it is

An insurer charges existing customers more than new customers for the same product. The practice is called price walking. The renewal letter just says "your new premium" with no indication you are being charged a loyalty penalty.

Where you will see it

Car insurance, home and contents insurance, health insurance, life insurance. Every type of personal insurance. The premium tends to rise each year, even if your risk profile stays the same.

What the regulators say

The UK Financial Conduct Authority found in 2018 that six million policyholders were paying high prices because of price walking. If they had paid the average price for their risk profile, they would have saved approximately £1.2 billion a year. The FCA banned the practice from January 2022. Australia has no equivalent ban. The price walk is legal here.

How they trap you

They say
Your renewal premium is attached.
It is actually
A loyalty penalty for staying with the same insurer.
What to do
Get three quotes every year. Switch or negotiate.

The story

Lucy's car insurance renews at $1,400. She has been with the insurer for four years. She decides to check competitors. The same insurer quotes her $1,050 if she signs up as a new customer. She calls and asks why. They match the $1,050. She saved $350 in five minutes.

Frequently asked questions

What is price walking in insurance?
Price walking is when an insurer increases the renewal premium for existing customers year after year, even when their risk has not increased. New customers are quoted lower prices for the same cover. The UK FCA banned the practice in 2022.
Is insurance price walking illegal in Australia?
No. Australia has no equivalent ban to the UK FCA rules. Australian insurers can legally charge loyal customers more than new customers. The Australian Competition and Consumer Commission has raised concerns but no specific rule has been introduced as of 2026.
How often should I switch insurance?
At a minimum, get three quotes every year before any policy renews. Even if you choose to stay with the same insurer, the quotes give you leverage to negotiate the renewal down.
Can I get a better deal by calling my insurer?
Yes, often. Insurers have retention teams whose job is to keep customers who are about to leave. Once you mention competing quotes, they can usually access discounts that were not in the renewal letter.
Does switching insurance affect my cover?
If you switch carefully, no. Make sure the new policy has the same or better coverage. Check excess amounts, exclusions and limits. Switch on or near the renewal date so you avoid cancellation fees.

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About the author

Enrico Scha spent 25 years inside the design industry that creates the patterns documented on this site. After leaving in 2025, he writes about how the patterns work so consumers can spot them in 10 seconds, not after the money is gone.

Former 25-year insider in the design industry that creates these patterns

Sources