Martin Lewis has urged all drivers to check their car insurance policies ahead of new regulations coming into force in January. The Financial Conduct Authority (FCA) will ban insurers from charging existing customers more than new ones, a practice known as the 'loyalty premium'.
Speaking in his MoneySavingExpert newsletter, Lewis explained that while the change is good news for those who never switch, it could lead to higher prices for those who actively seek the best deals. He said: 'With firms forced to offer new and existing customers the same prices, the new structure will likely meet somewhere a little above halfway between them.'
Lewis warned that the cheapest switching deals may start to disappear as insurers adjust their pricing algorithms before the January deadline. He suggested that now could be a 'sweet spot' to check car and home insurance prices, advising drivers to act quickly to lock in cheaper rates.
For those approaching the end of their policy, shopping around could yield savings. Even mid-policy, if the savings are significant, it may be worth switching despite a potential £50 cancellation fee. However, Lewis cautioned that switching could result in losing a 12-month no-claims discount.
The FCA estimates the new rules will save consumers £4.2 billion over ten years. Lewis recommends checking prices around three weeks before a policy is due to end, as research suggests the optimal time to bargain hunt is 23 days before the start date.
