Research AFM: loyal customers with many insurers punished with a higher premium

For almost half of the insurers, loyal customers pay more premium than newer customers, without those differences who can be explained by, for example, a different risk profile. That is the conclusion of the Netherlands Authority for the Financial Markets.

The AFM did not announce how many customers are the victims. « But in view of the numbers – a car insurance is mandatory, for example – this is not about a few hundred people, » explains senior supervisor René Geerling. The AFM points out that customers who do not switch much are often less digitally skilled and have a lower income. « Loyal customers are therefore potentially vulnerable. »

If there is really no explanation for the differences, the insurers will violate Dutch and European rules on fair treatment of customers and product development. The watchdog is now discussing this with the sector, after which possible enforcement can follow.

31 Insurers

The AFM investigated 40 million insurance policies from 31 insurers in three years. The watchdog compares the premiums of loyal customers – who have been customers for nine years or more – with relatively new customers – between one and two years of customer, so after the first year in which welcome premiums often apply. The research focused on the three forms of car insurance policies (WA, WA+ and AllRisk), household insurance and liability insurance. In the first four forms of insurance, the ‘loyalty fine’ was seen by the AFM.

With one AllRisk car insurance, loyal customers even paid 50 percent more than new customers

In 47 percent of the insurers there was a loyalty fine with at least one in five insurance products investigated. If there is a loyalty fine, it is often a premium difference of more than 10 percent. With one all-risk car insurance, loyal customers even paid 50 percent more than new customers-the AFM did not announce names. With household insurance there were two negative outliers of more than 30 percent.

Incidentally, there are also insurers where loyal customers are rewarded for their loyalty. The AFM therefore mainly calls on consumers to take a good look at their personal situation and product as a result of the research. Geerling: « Considering your own insurance. It is always good to do that regularly: the personal situation may have changed. And also not only look at price. You have to deal with insurance at miserable moments in your life: in the event of a burglary, collision or medical problem. At those moments, the coverage is at least as important as the price. »

‘First in conversation’

The AFM conducted the investigation in response to similar conclusions in the United Kingdom, Ireland and Sweden. In the UK, for example, as a result of the research, it is now forbidden to offer new customers a lower premium than existing customers. This is not yet the case in the Netherlands. « We are now first talking to the sector about the explanibility of the premium differences, » said Geerling.

In a response, the Dutch Association of Insurers announced that it is important to find that « new and existing customers are treated as much as possible in the same way and differences in premium can be explained to the customer, » says director Richard Weurding. The covenant thinks it is good that the AFM pays attention to potentially inexplicable premium differences, but also warns of too rapid conclusions, because the watchdog has not yet spoken with the insurers about possible explanations. « It is important to wait for the results of the conversations. »

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