What tempts motor customers to switch in a world without the ‘loyalty penalty’?

In June 2025, the number of people switching their motor insurance provider at policy renewal hit a record low, with just one in three consumers doing so – well below the peak of nearly 50% in late 2024.

Ian Hughes, chief executive at market research firm Consumer Intelligence – whose data revealed the downwards trend – attributed the lack of switching behaviour to the impact of general insurance pricing practice (GIPP) regulations, a set of guidelines best known for removing insurance’s “loyalty penalty”.

As previously reported on by Insurance Times, GIPP regulations led to a reduction in renewal prices that reduced switching behaviour, but this raises another question – with GIPP not going anywhere, what factors will tempt motor customers to switch in the coming years?

The answers may be found in a survey of 4,000 motor insurance customers conducted by Consumer Intelligence between April and July 2025, which asked respondents, among other things, to rank the importance of considerations they had when thinking about switching policy.

Price, perhaps unsurprisingly, was most commonly ranked as the top consideration, being done so by 35.6% of respondents.

Quality of cover proved to be the second most important feature, ranked number one by 23.8% of people. Cover was also ranked as the least important consideration by the fewest number of people (5.9%).

Changing provider to a “trusted brand” was also highly important and was ranked first by 21% of surveyees.

Interestingly, personal experience, recommendations from consumer advice sites, customer reviews and personal recommendations scored far lower as key considerations, suggesting that anecdotal experience has less of an impact on potential switchers than the perceived quality of the brand.

Recommendations from people the consumer knew personally proved the least important factor, ranked top by just 3% of people, and bottom by 23.8%.

Reasons to switch

Focusing on specific reasons cited by customers who ended up completing a motor insurance switch, price once again proved to be the main driver – although the large number of additional factors mentioned highlighted service areas in which insurers can look to differentiate themselves.

Switching for a better level of cover was cited in 21% of responses, as well as unhappiness with their previous insurer’s terms (11%) and cover levels that were too low after a claim was made (8%), suggesting consumers may be unclear on their cover level when they take out a policy.

Cashback for switching, cited by 18% of respondents, and the availability of loyalty points, cited by 8% of people, both suggest that consumers can be tempted with temporary monetary perks.

Customers who switched also did so in high volumes due to poor claims service (8%), bad call centre experiences (7%) and bad website or app experiences (7%), highlighting the importance of customer service in retaining policyholders.

Insurer opportunity

Many customers who began shopping for new insurance ended up staying with their previous provider and their reasons for doing so may become even more important in a post-GIPP world that sees less price-based differentiation.

Putting aside popular financial reasons for staying – such as their current insurer matching their best new quote, cited by 19% of remainers, and no savings or too low savings found, cited by 18% and 13% – only a limited number of reasons for not switching were seen.

A positive claims experience was the biggest non-financial reason for staying, with 14% of respondents referencing it in their responses.

Some 8% of policyholders said that they remained because a cheaper quote they had received “offered lower service”, 6% remained because a cheaper quote had come from a company they hadn’t heard of and a further 3% because they had had bad experiences with cheaper companies.

Insurers may take heart in the fact that consumers were often reluctant to move to cheaper insurers when they feared cover or service quality would be worse.

Service differentiation 

While the importance of price to consumers is not going to change, Hughes feels GIPP gives insurers wider scope to differentiate in other areas.

He explained: “Consumers don’t [just think about price], they look at value. The cheapest price on a price comparison website doesn’t just win all the business. If it’s all about price, why doesn’t it?

“The answer is because consumers do think about other things – they think about cover, they think about brand, they think about ‘I was insured by them last year and they’re rubbish’.

“There is more to it than price.”