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Loyal customers punished by policies

Insurance companies are passing on their own rising costs to the customers who are most loyal to them, an economist has warned.Policies for existing clients are super-charged to account for the cost that companies incur when offering lower premiums to new customers, says Professor Vincent-Wayne Mitchell, an expert in marketing and member of the Cass Business School.Professor Mitchell told BBC Two's Working Lunch programme: "It's not good business sense. It might not be illegal but it is unethical to anyone."Secondly, they're really focusing on customers' inertia; the fact that people haven't got the time to go online, to look at websites like, or when they do go there it's such a confusing thing that they don't actually understand what they're buying."Thirdly, they have information on these customers that they're actually more loyal than everyone else; they've been with them for three or four years and therefore aren't price sensitive. So we have this perverse situation, rather than rewarding their loyalty they're actually punishing it."Professor Mitchell made his comments in light of Working Lunch viewers lamenting car insurance renewal costs, with some existing policy-holders claiming they were charged £200 more than new customers.

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