- Most wait until the day before renewal to shop around
- UK drivers lose over £3.5bn a year by delaying motor insurance premium renewals
- Consumers lose out on nearly £0.5bn (£0.47bn) waiting to the last moment to shop around for home insurance.
Even savvy consumers who switch their home and car insurance to a new provider each year could be missing out on even greater savings. According to the latest research by comparethemarket.com, consumers should consider switching their car insurance three weeks before the renewal date and their home insurance four weeks before the renewal date for the optimal saving. By switching at the best moment consumers could collectively stand to save £4bn over the course of the year.
Comparethemarket.com data shows drivers can stand to save on average £234 if they opt to switch their car insurance provider three weeks prior to the renewal date, when the average cost of policy is £366, in contrast the average price on the day before renewal is £600. However, 15% of consumers wait until that day to shop around for a new policy. Collectively consumers are missing out on over £3.5bn of savings.
In contrast home insurance policies increase in cost up until 7 days prior to renewal, before falling marginally before the renewal date, although the cheapest time to renew is still 28 days before the renewal date. At its highest home insurance costs on average £120, whereas at its lowest it is £114, a difference of £6. Predictably, most consumers wait until the day before renewal, when queries increase to 12%. Although there are smaller savings to be made on home insurance than on motor insurance, collectively nearly £0.5bn (£470 m) is still being thrown away by switchers who leave it to the last minute.
Simon McCulloch, Director of Insurance at Comparethemarket.com, commented, “The way insurers decide on pricing over the course of the month taps into their knowledge of consumer behaviour. It is human nature to put off chores like buying insurance to the last minute, but consumers probably don’t realise that they are being financially penalised for it too. However, only 41% of all consumers switch car insurance and 29% switch home insurance, so although some savvy switchers are missing out on an additional saving, the vast majority of consumers are still renewing their existing policies and paying way over the odds costing them £6bn in lost savings.”
Dr Thomas Webb, Social Psychologist at The University of Sheffield and Chair of The Institute of Inertia, said:
"It is not surprising to see that consumers are losing out on savings by not switching at the right time. Our research with the Institute of Inertia suggests that many consumers are not aware that prices for insurance products change as they get closer to the renewal date. Even if consumers do realise this and intend to identify the best deal and switch at the optimal time, research suggests that people struggle to act on their good intentions – the momentum of day-to-day life means that people struggle to make the time to overcome inertia and take action.
All data, other than that referenced below, is sourced from comparethemarket.com.
Data relating to the percentage of home insurance and car insurance policy holders switching is sourced from YouGov.
About the Institute of Inertia
The Institute of Inertia, a partnership between comparethemarket.com and the University of Sheffield, launched in 2015 and looks at the psychology behind financial inertia to help consumers save wasted time and money.
The Institute of Inertia is a network of experts and academics led by The University of Sheffield’s Dr Thomas Webb, a specialist in consumer behaviour.
A programme of qualitative and quantitative research tranches inform the Institute of Inertia to help shape and test potential solutions to drive behavioural change.
For more information on the Institute of Inertia, please visit www.Instituteofinertia.org
About Meerkat Movies
Meerkat Movies is comparethemarket.com’s customer rewards programme. It was officially launched on 3 April 2015.
Meerkat Movies offers comparethemarket.com customers, who have made a qualifying purchase, 2 for 1 cinema tickets for a whole year from date of purchase, redeemable at participating cinemas every Tuesday or Wednesday.
You can only have one Meerkat Movies membership in any 12 month period. It can take up to 48 hours to activate your membership.
For more information visit http://www.comparethemarket.com/media-centre
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