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Dual pricing and why it is possible to treat customers fairly | Insurance Business

How do insurers build loyalty when consumers are told that sticking with the same insurance company or phone contract year after year costs them more money?

The dual pricing model used by many insurers exploits customer loyalty rather than rewards it. Enticing new customers with cheap introductory offers while existing customers see their premiums increase each year has become accepted practice but it’s one that is unfair and provides a poor customer experience.

Citizens Advice’s super-complaint about the loyalty penalty to the Competition and Markets Authority (CMA) should be a wake-up call for the insurance industry. The CMA estimates that across the five insurance markets of home insurance, mobile, broadband, mortgages and savings, the total penalty for loyalty could be £4 billion.

Citizens Advice found 8 in 10 people are paying a significantly higher price in at least one of these markets for remaining loyal with their existing supplier.

The government, the Financial Conduct Authority, and the Association of British Insurers have all spoken out against dual pricing. So far there has been little change but insurers need to take action before consumer trust in the industry is eroded further.

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Dual pricing and why it is possible to treat customers fairly | Insurance Business.

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