News 08/04/25

Call to insurers: ensure a fair premium for loyal customers

Loyal customers sometimes pay more premium for their non-life insurance than comparable newer customers. Research by the Dutch Authority for the Financial Markets (AFM) shows that this occurs at almost half of the non-life insurers studied with at least one product group. We are concerned about these findings as they might conflict with the fair and careful treatment of customers. The AFM will discuss this with the insurers involved in the coming period.

In short

Almost half of the non-life insurers studied have higher profit margins for loyal customers

Increasing profit margins after 1-2 years of customer tenure may compromise the fair and careful treatment of customers

Almost half of the insurers studied have higher profit margins for loyal customers

We investigated whether the profit margin on the group of loyal customers was higher than on the group of newer customers at 31 non-life insurers. We compared the profit margin on customers with a policy that ran for at least 9 years with that of customers with a policy that ran for 1-2 years. Over the period 2021-2023, we examined a total of 47.7 million private car (WA, WA+ and All-risk), home contents and liability insurance policies.

Our investigation revealed that in 2023, almost half of the non-life insurers had a higher profit margin on loyal customers than on newer customers. This applied to at least one product group. The increased profit margin was often more than 10% when comparing customer groups of 1-2 years to those of 9+ years.

For the three types of private car insurance, 19% to 30% of insurers had higher profit margins from loyal customers, while this figure stands at 23% for home insurance. Liability insurance shows virtually no increased profit margins for loyal customers. In all the insurances studied, it is also a regular occurrence that loyal customers pay less than new customers.

Increasing profit margins after 1-2 years of customer tenure may conflict with the fair and careful treatment of customers

The AFM is concerned about the findings of the investigation. The AFM Consumer Monitor and research by EIOPA show that potentially vulnerable consumers who rarely or never switch can be at a disadvantage, particularly individuals with limited digital skills.

If increased profit margins occur after the customer group with a tenure of 1-2 years (welcome discounts are occasionally given to the 0-1 year group), we expect the insurer to have explicitly substantiated that the customer's interests have been taken into account in a balanced way, in accordance with the legal standards. If it turns out that more loyal customers pay higher premiums without any difference in risk profile, or for no other valid reason, this may represent a violation of the legal standards on product governance.

We have now addressed the insurers who had higher profit margins for loyal customers. In the coming period, we will be talking to them about compliance with the legal standards on product governance. We are also in consultation with the Dutch Association of Insurers. The AFM will continue to monitor the developments regarding margin personalisation in the insurance sector.

Any questions?

If you have any questions, please contact the Business Desk of the AFM, either by email to ondernemersloket@afm.nl or by using our form. You can also contact us by phone on Mondays, Wednesdays and Thursdays between 10.00 and 13.00 at 08 00 68 00 68 0 (calls are free of charge).

Explanation visual

This visual shows that loyal customers sometimes pay more premium for their non-life insurance than comparable newer customers. Research by the Dutch Authority for the Financial Markets (AFM) shows that this occurs at almost half of the non-life insurers studied with at least one product group.