Loyal families pay almost twice as much for home insurance than new customers, campaigners revealed last night.
A third of policy staff stay with the same provider for six years or more, says Citizens Advice.
But this band of loyal customers is being scammed rather than rewarded with average premiums of £ 325 a year.
Incredibly, these punishing accounts fund the entire £ 1 billion profit for the sector, researchers claimed.
New customers who switch suppliers every year to find the best deal are fought by the largest insurers in the UK, bringing them in with much lower annual accounts of £ 172 on average.
The findings are a further indictment of the redemption of the insurance loyalty that the Daily Mail has been campaigning against for a long time, and comes as the industry comes under increasing pressure to stop to take advantage of customers to support profits.
Last week, in a win for the Mail campaign, 50-year-old specialist Saga said it would now offer fixed price policies for three years.
Saga chief executive Lance Batchelor admitted loyal customers were punished for not switching, so that his company could compete with others for new businesses on price comparison websites. The announcement saw his shares crash by 37 percent.
Last year, Aviva promised not to automatically raise annual prices. Direct Line also believes that developments are being closely monitored.
The Financial Conduct Authority reviews the pricing practices of insurers and could intervene to force companies to change their costs.
Trade Body The Association of British Insurers said the investigation has overlooked other factors that affect how a company makes a profit. But it did acknowledge that fierce competition between insurers for new contracts could lead to long-term losses for customers.
Loyal customers are scammed instead of rewarded, with average premiums of £ 325 a year
Citizens Advice discovered that 3.75 million policies were held for 11 years or more. More than seven out of ten of these policyholders were classified as potentially vulnerable. Charity chief executive Gillian Guy said: “It is shocking that home insurance companies make all their profits by operating loyal customers. What makes this even worse is that vulnerable people are probably the most loyal to their provider. & # 39;
The charity filed a complaint with the Competition and Markets Authority last September about fines for loyalty in the mobile, broadband, mortgages and savings market, and for home and car insurance. The watchdog discovered that loyal customers were sold at £ 4 billion a year in all five markets, and the regulators ordered action.
Retired Diane from Kent had been with the same home insurer for more than ten years and had seen her premiums rise from £ 1,500 to £ 3,500.
Diane, 76, who did not want to reveal her last name, suffers from severe arthritis and without internet access, she has found it easier to stay with the same insurer.
But when she received her last letter of renewal and saw that her premium was more than 130 percent higher than the price she paid as a new customer, she felt she had no choice but to look for a new deal in the Yellow Pages.
By switching to a new home insurer, Diane pays £ 958 a year.
She said: I feel that I have been abused – they are just trying to make as much money as possible.
& # 39; I don't understand how my premium has risen so much in recent years. It is difficult for people my age to try shopping around, but when my innovations come in, I will have to try, because a loyal customer does not pay. & # 39;
Consumer campaigner Andrew Hagger, of personal finance website Moneycomms, said; & # 39; It is fundamentally wrong that insurers penalize loyal customers and that new customers are offered an attractive, cost-effective deal at their expense.
& # 39; There is little reward for loyalty within UK financial services and customers need to realize this and switch to a better deal for their own benefit instead of filling the pockets of insurers. & # 39;
Hugh Savill, regulatory director at the Association of British Insurers, said insurance companies have committed to reviewing the premiums charged to customers who have been with them for more than five years.
He added: & # 39; We always encourage people to shop around with renewal because, as Citizens Advice confirms, you can often get exceptional value this way. & # 39;
The Financial Conduct Authority plans to publish its findings in the summer.