No reward for loyalty


While a lot of our work at CHOICE is about consumer traps, we tend to focus on those that lie in the public arena – such as misleading advertising, or products that don’t live up to the promise on the packaging. These traps can be observed, but they often require an expert eye, which is why so many people are members of CHOICE.

There is, however, an entirely other category of traps, which are hidden and hard for even us to find. These are particularly prevalent in products that are individually priced, such as insurance. We can investigate the policy terms – what's covered and what's not – and we can gather general data on pricing, but what we can't see is what premiums insurers are charging individual customers. And that's often where the real traps lie.

Insurers are known as some of the worst culprits for applying a loyalty penalty – higher prices for loyal, long-term customers. There aren’t many good sources of data on how much more loyal customers pay for insurance, but when a New South Wales regulator looked at the issue in 2018, it found that on average, existing customers were paying 27% more for home and contents insurance than new customers.

Despite knowing about this practice, I had failed to apply it to my own situation. That was until I received my recent home and contents insurance renewal notice, which indicated our premium was about to go up by more than 20%. Many people are facing increases of this scale at the moment, but it did prompt me to do a quick shop around.

I expected that I might save a bit of money, but I was absolutely floored when the best quote from another major insurer came in at around half the price I’d been quoted by my existing insurer. Based on CHOICE comparisons, I could see the policies were almost identical – the same levels of cover, the same exclusions. The only difference was that one of them cost twice as much as the other.

I am somewhat embarrassed to share this story, because it reveals how occasionally I fail to follow my own advice! But I’m also keen to share it because I know there will be many people reading this who have been wondering how they are going to afford to pay their insurance premiums.

If you’ve got insurance for your home and car and have been with the same insurer for more than a few years, there’s a good chance you’re also being fleeced. It’s not too hard to take your renewal notice, ring a few other insurers and ask them for a quote based on the same levels of cover. You might be pleasantly surprised to learn how much you can save.


Doesn’t seem uncommon sadly …

Some time back when TIO was slurped up by Allianz, my bike insurance increased literally threefold. I figured Allianz didn’t want/weren’t in the bike insurance business, so they didn’t get my business. I check yearly now, as I do for building and contents.

More recently I haggled CBA into a mortgage rate that was ‘for new customers only’ - arguing the loyalty stance (and how there wouldn’t be any on my part if I couldn’t get the same rate as a new customer).

Just the other day I made the switch to NBN FTTH - the ‘waiting for install, we’ll put you on FTTN in the meantime’ rate was a lot lower than what I was already paying the same ISP - I’m now on that lower rate for the same service until the fibre appears …

Loyalty … a quaint concept these days … resulting in a tax on people who still want to believe in that old fashioned concept of trust …


On my renewals I have switched whenever I found a better deal. About every other renewal go-around the renewal seems to be as sharp as it gets so I stay for another year. The next subsequent year back to the games. My impression is they think they are demonstrating that I don’t need to shop around and hope I won’t but I will and do.


For many years, after I received my home and contents renewal notice, I would go online and get a quote from my insurer as a new customer, then phone them to negotiate a better deal. Until recently it would save me enough money to make the effort worth it, but the last couple of years it hasn’t produced any saving, and this year it actually would have cost me slightly more as a new customer. The other surprise this year was a roughly 280% increase in my premium! I don’t live in an area at risk of flood or bushfire, so I asked my insurer why the premium was so high and was told it was the increased cost of construction. To check this out, I got four quotes from other insurers (listed by CHOICE as the cheapest in my area) only to find them all similar. I managed to reduce my premium by increasing my excess to the maximum and decreasing the sum insured for both home and contents, but I’m still paying 250% more than last year.


My NRMA CTP (green slip) insurance cost $324 last year (2022) but was to be $407 this year, so I checked with QBE to find that they are $92 cheaper, at $315 for this year. I have an almost forty year history with NRMA and I suspect they expected me not to look sideways.

I spoke to NRMA to no avail and am disappointed. The take home message is, irrespective of the length of any relationship you may have, particularly with a major insurer like NRMA, constantly check that you are not being ripped-off.


Welcome to the Community @Clive1.

I merged your post into this existing topic that reinforces one should get quotes every year. In many cases a new policy even with an existing insurer will be cheaper than the ‘discounted’ renewal.