It pays not to be loyal

Home insurance holders who stick by their provider are missing out on discounts and offers which effectively penalise loyalty, according to a new study.

While loyal customers pay the same prices, home insurance companies are offering new customers discounts and incentives which are not available to existing policy holders, claims analysis firm Defaqto.

Over the last year, new customers have seen the cashback incentive grow by around 60 per cent, with some claiming up to £125 by applying online through cashback websites.

Report author Brian Brown said: "It hardly seems in keeping with the FSA’s rules for Treating Customers Fairly that two customers with exactly the same risks should pay markedly differing amounts for their policies.

"It would appear that increasingly loyalty never goes unpunished and rewards are only available for the disloyal."

The report attributed the rise in deals to attract new customers to the rise of broadband and the internet, which allows home insurance customers to shop around and forces financial providers to make eye catching offers.