The FCA is out with their report on insurance pricing in the UK.
Key chart – the blue line is customer margin against length a policy is held (tenure). The bars show dispersion of margin at each tenure.
What this tells you is that customer margin is correlated with tenure (but that there is dispersion so it is not the only variable).
In other words – the longer you are a customer the more margin you pay …
“The difference in average customer margin between a front book customer (tenure 0) and a longstanding customer (tenure >10) is 31 percentage points for buildings-only policies, 39 percentage points for combined building and contents policies, 33 percentage points for contents-only policies and 21 percentage points for motor policies“
This is something the FCA is taking action on – calculating £1.2bn could be saved (in a total market of £18bn).
