Insurance customers should still be proactive by haggling and potentially switching when their policy comes up for renewal, as they could be paying more than necessary despite a “loyalty penalty” ban having been introduced at the start of this year, according to Which?

The Financial Conduct Authority (FCA) put the ban in place after finding that millions of home and motor insurance customers were losing out by renewing repeatedly with their existing providers.

In January, the FCA implemented new rules which banned car and home insurers from offering different prices to equivalent new and renewing customers.

• £35 for car insurance

• £41 for home insurance

In a survey of more than 14,000 Which? members, the consumer group found that just over half (51%) of those with home insurance, and around four in 10 (43%) with car insurance, were paying a higher premium this year than they did last year.

The average increase among those seeing a rise was £35 for car insurance customers and £41 for home insurance customers.

Out of those customers paying more, half (50%) were renewing with their current car or home insurer.

Which? also found that those who haggled with their current provider or switched could still make significant savings.

When it came to haggling, a quarter (25%) of those surveyed discussed their price with their insurer this year, and of those who did, around half (48%) saw a reduction in their premiums – averaging £56 for car insurance and £54 for home insurance.

Those who instead decided to switch insurers also made significant savings. Car insurance customers who switched insurer were found to be paying £43 less, on average, than those renewing. Home insurance switchers were paying £103 less.

The research also compared premiums paid by customers in the first six months of this year, after the ban came into force, with premiums paid between May and December 2021.

For car insurance policies bought before the end of December 2021, people paid £360 on average. For cover bought between January and June this year, after the ban came in, the average annual price was slightly less, at £343.

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Home insurance customers typically saw a fall from £332 to £329, over the same period.

But Which? said that most indicators suggest car insurance prices are now generally back on the rise.

This is largely because of increasing claims costs to insurers, caused by factors including increased used car prices and higher costs and delays in obtaining parts and materials for repairs.

Which? also pointed out that the new loyalty penalty rules still allow insurers to offer customers different prices depending on the “channel” used – for example, whether they go directly to the insurer or use a comparison site.

Insurance quote prices also change from day to day, so it is always worth doing some research before approaching an existing provider or considering making a switch in order to save money, the consumer group added.

Jenny Ross, Which? Money editor, said: “With household budgets under huge strain at the moment, it’s important not to renew your insurance without first checking if you could pay less.

“Our research shows it’s still the case that the price quoted by your insurer is not necessarily the best price you can get.

“Doing your research on comparison sites, haggling and switching remain effective ways of bringing down the cost of home and car insurance.”

A spokesperson for the Association of British Insurers (ABI) said: “The ABI supports these reforms, having asked the FCA to bring them in across the motor and home insurance markets. Insurers continue to work hard to make sure the transition to the new pricing reforms is as smooth as possible for customers.

“Like many other sectors, the industry is facing significant cost pressures – such as supply shortages, more expensive materials, and more costly repairs.

“Despite this, insurers are doing all they can to keep motor and home insurance as competitively priced as possible. This is highlighted by our latest motor and home insurance premium trackers, which show the average price paid for both motor and home insurance has fallen over the last year.”

An FCA spokesperson said: “Our reforms have put an end to loyal customers paying higher prices for their insurance.

“We will always encourage customers to shop around to find the best deal, and will continue to monitor the impact our changes have on the market.”