# Insurance loyalty tax > The insurance loyalty tax is the gap between what loyal and new customers pay for the same cover. Check whether you are overpaying, and what to do. Canonical: https://kapiinsurance.co.nz/insurance-loyalty-tax/ Last updated: 2026-08-09 Are you paying too much for staying loyal? Stay with one insurer for years and renew without checking, and you will likely pay more than someone who signed up for the same cover last week. People call it the loyalty tax. It turns up on [car insurance](https://kapiinsurance.co.nz/car-insurance/), [house insurance](https://kapiinsurance.co.nz/home-insurance/) and [contents insurance](https://kapiinsurance.co.nz/contents-insurance/) renewals the same way. The Renewal Gap ## What is the insurance loyalty tax? The insurance loyalty tax is the gap between what long-term customers pay and what new customers pay for the same cover. Nobody levies it. Insurers price low to win new business, then let the price climb on renewals. Year by year, the price creeps up. Small increases, well past inflation or any change in your risk. At the same time, insurers advertise sharp introductory pricing to pull in new sign-ups. Renew without shopping around and you can end up paying noticeably more than the person who just switched to your insurer for the same coverage. ## Why does the insurance loyalty tax happen? Insurers make more from customers who renew quietly than from customers who compare prices. Lower introductory premiums and cashback offers are paid for by the renewal book. It is easy to set up car or home cover once, tick auto-renew, and never look again. Insurers count on that. New customers get the lower introductory premiums, the cashback deals, the waived excesses. Those sweeteners cost money, and the money comes from policyholders who don't switch. Market-wide rises hide the gap. Stats NZ's consumers price index recorded vehicle insurance prices rising 22.6 percent in the year to March 2024, driven by reinsurance costs and severe weather. Every renewal letter in the country went up with them. By mid-2026 the same index shows vehicle insurance prices roughly flat, so a renewal that keeps climbing now is something else. The pattern is the same in Hamilton and Dunedin. It is not unique to New Zealand, either. ## How do I check if my insurance costs are too high? Compare your renewal with what you paid last year, then get a new-customer quote from your own insurer. If the fresh quote is lower for identical cover, you are paying a loyalty tax. The renewal letter on its own will not tell you. 1. **Compare your renewal to last year** Get out last year's renewal notice. Put the premium next to this year's. If it rose and nothing about your situation changed, ring the insurer and ask them to explain the increase. 2. **Get a new-customer quote from your own insurer** Use your insurer's website and quote as a brand new customer. Same details, same sums, same excess. If the new-customer price lands below your renewal, that is the loyalty tax in numbers. 3. **Get quotes from other insurers or use a comparison tool** Put your renewal next to quotes from other providers. Like for like matters: same coverage levels, same excess, same sum insured. A comparison tool or a broker can widen the field for you. 4. **Ask a broker to review your policies** A broker will go through your current policies and tell you whether the price matches the cover. You don't have to work it out yourself. Annual percentage change in the CPI class, quarterly, March 2016 to June 2026. Source: Stats NZ consumers price index, level 3 classes. Hover or tap the chart to read any quarter. Annual change in Stats NZ CPI insurance classes, 2016 to 2026. The surge of 2023 and 2024 has flattened, so a renewal that keeps climbing deserves a closer look. ## How do you avoid the insurance loyalty tax? Price your cover again before every renewal date, and use a competing quote when you talk to your insurer. That is the fix, and it takes an evening a year. It gets skipped because the policy renews itself. ### Shop around at every renewal Compare your renewal against quotes from other providers. Even if you stay put, a competing quote gives you a stronger hand when you negotiate the price on the policy you already have. ### Call and negotiate Premiums gone up? Pick up the phone. Insurers keep retention teams with the authority to discount for customers who are thinking about leaving. It won't always work. Asking costs nothing. ### Don't auto-renew without checking Set a calendar reminder a few weeks before the renewal date. That window is enough to review the policy, check the price and shop around if the number looks wrong. Auto-renewal is the mechanism insurers rely on. ### Use a broker Kapi Insurance reviews your cover and pricing every year as part of the service. If you're overpaying, we'll tell you. If better options exist, we'll find them. [Learn more about how brokers work](https://kapiinsurance.co.nz/why-use-insurance-broker/). Two schedules, one year apart. The agreed value is the line to compare first. ## Why check the renewal schedule as well as the premium? Your renewal schedule lists the numbers a claim is settled on: agreed value or sum insured, excess, sub-limits, any endorsement. Read it alongside the premium. A payout figure can fall in the same year the premium rises. Standard wordings set the agreed value when the policy begins and again at each renewal, so the figure on your car can be cut while the premium goes up. Nobody rings to tell you. Closing the gap takes two minutes a year. Put last year's schedule next to this year's and compare three numbers: the agreed value or sum insured, the excess, and any sub-limits that matter to you. If the agreed value has dropped and you think the vehicle is worth more, say so before you pay. The figure is negotiable at renewal and fixed the day after. House sums insured drift upward through automatic indexing. That direction is safer, and still worth confirming against your actual rebuild cost. ## Should you switch insurers on price alone? Switching on price alone can leave you worse off. A cheaper car policy often carries a higher excess, and a lower-cost contents policy may cover less of what a flood or an earthquake destroys. Compare the cover, then the number. Check the sum insured, the excess, the exclusions and any special conditions. A cheap policy that declines your claim has cost you the premium and the loss. On a house, underinsurance only shows up after a disaster. This is where a broker earns their keep. We read the whole policy, and the price comes after. ## Common questions about the loyalty tax Short answers on renewal pricing. If yours is not here, ask us directly. - **What is the insurance loyalty tax?**: The insurance loyalty tax is not a literal tax; it is the gap between what long-term customers pay and what new customers pay for the same cover. Insurers price to win new business and rely on existing customers renewing without checking, and the gap grows each year you do. - **Does getting insurance quotes affect my record or premium?**: No. Getting quotes does not affect your premium or your insurance record, and there is no credit-check equivalent for general insurance quotes in New Zealand. You can compare at every renewal, and against your own insurer, at no cost beyond the time it takes. - **Can my agreed value go down at renewal without me asking?**: Yes. Standard wordings set the agreed value when the policy begins and again at each renewal, so the figure can be moved down while the premium moves up. The change appears on the renewal schedule, not in a phone call, which is why the schedule is worth reading every year. - **How often should I shop around for insurance?**: At every renewal. Quotes are only valid for a short window, so there is no way to bank a good price early; the practical rhythm is to compare in the last few weeks before each renewal date, using identical cover levels, excesses and sums insured so the numbers mean something.