NSW Emergency Services Levy Insurance Monitor Allan Fels has called for “public submissions” on an alleged “loyalty tax” charged by insurers.

As previously reported by insuranceNEWS.com.au Professor Fels says customers renewing with insurers are charged on average 27% more than those taking out new policies.

Insurers dispute the “loyalty tax” interpretation, instead referring to a “new customer discount”. They are also highly suspicious of the 27% figure, having been given no detailed breakdown of how it was reached.

Now Professor Fels has released a “discussion paper” on the issue and is calling for submissions from consumers and insurers.

“Loyalty doesn’t seem to pay when it comes to home and contents insurance,” he said.

“I’m keen to hear from not only insurance companies as to how this is explained, but also what the public and insurance consumers have to say.

“Insurance pricing in Australia is largely unexamined. There’s an opportunity for the public to have a voice in this apparent trend of rewarding those who leave rather than stay.”

Professor Fels says the discussion paper analyses data gathered from insurance companies “detailing the total premium price per policy of home insurance”.

He reports “the trends in average total premium per policy for new policies and renewing policies for the top 10 insurers in the combined home and contents insurance segment”.

He says the analysis is based on “underlying data that insurers have reported to the monitor”.

“Renewing customers in June this year were paying about $355 or 27% more than that charged for new customers in that month,” he said.

The Insurance Council of Australia told insuranceNEWS.com.au that neither it nor its members have been provided information about “the methodology used by the monitor”.

To read the discussion paper or make a submission before December 20, click here.