Martin Lewis warns of a “massive change” in the insurance sector next year that will affect every family and motorist across the UK.
Explaining the change in the latest MoneySavingExpert.com newscast, Consumer Champion wrote: “On January 1, 2022, the regulator, the FSA, introduced new insurance rules. They mainly apply to vehicle insurance (cars, motorcycles and vans) And home (buildings and contents) insurance, but it’s a massive change – the biggest I can remember.”
The reason for the change, the financial expert said, is to end price hikes – customers who renew their insurance policy each year are penalized by seeing their rates go up while new customers get the best deals.
To help everyone understand the changes, the founder of MoneySavingExpert.com has created a list of 12 people who need to know and what you should do about the new rules – here are the main points.
Auto and home insurance changes effective January 1, 2022
Martin explained: “The loyalty premium has always been a matter of dispute. It’s great news for those who don’t change or do but don’t want the hassle. The rules state that insurers must demonstrate, in aggregate, that they charge similar fees to new and existing customers, including No coupons or cashback.
Martin’s expectation of price matching for all customers
While the money expert has no guarantee of how companies will handle the rule change, his guess is that they won’t just cut renovations to match entry-level prices.
He said, “They will drop them somewhat, and increase the rates for new clients—meeting towards the middle.
“Don’t think the savings by switching will go away completely. Different insurers will still have different rates – and new entrants will try to disrupt the market – but the savings will likely be lower.”
Insurance rates may change before January
Martin’s prediction here is that since implementing the rule change is such a big task, many insurers will “likely start changing pricing algorithms soon” meaning that cheap deals may now disappear “within weeks or months”.
Use more than one comparison to find the best deal
“The comparison sites are actually technically insurance marketplaces, where insurance companies are allowed, and sometimes offer, cheaper rates on individual sites than they charge directly,” Martin writes.
It is recommended to use at least two different websites to compare to find the best deal.
Get quotes 23 days before the policy renewal date
This is something the 49-year-old has paid for before because the timing of your renewal could make a huge difference to your bank balance.
He said: “We analyzed more than 70 million quotes and found that the optimal time to get new quotes for auto insurance is 23 days before a renewal (21 days for a home), but any time around three weeks is a good thing.
“Leave it for later and car insurance rates could nearly double because insurance companies’ algorithms show that those who get new quotes earlier are less risky (the rise is much less steep with home insurance).”
To read all the necessary information about 12 auto and home insurance, visit the MoneySavingExpert website here.
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