They can. The FCA rules that ended the loyalty penalty cover home and motor insurance, not private medical insurance, so PMI renewals can exceed new-customer prices.

What actually happens

The loyalty penalty is the gap between what a new customer is quoted and what a long-standing one is charged for the same cover. In January 2022 the FCA banned this practice — but only for home and motor insurance, where it required renewal prices to be no higher than the equivalent new-business price. Private medical insurance was not included in those rules.

That means a PMI insurer can lawfully quote you, as a renewing customer, more than it would quote a new applicant for identical cover. It is not a loophole so much as a market the loyalty rules simply do not reach, and it is the single biggest reason a renewal is worth questioning rather than paying automatically.

The practical response is to behave like a new customer once a year. Get the same cover priced across the market, and use a cheaper quote both as a saving and as leverage with your current insurer. Because you can switch on continued personal medical exclusions, acting on a better price does not mean giving up the conditions you have covered.

There is a limit to how far you can chase it: switching insurer usually means losing any accrued no-claims discount and starting that scale again, and a very cheap plan may carry a narrower hospital list. Weigh the headline saving against those before you move, ideally with a broker checking the whole comparison.

Questions to put to the insurer or broker

  • What would a new customer pay for the exact cover I am renewing?
  • Will you match or improve a cheaper quote I have found elsewhere?
  • If I switch, what do I lose in no-claims discount or hospital access?

Related questions

What a switch cannot change

Switching insurer or adjusting cover changes the price, not your medical history. A condition you already have stays excluded when you move — carried across as it stands on continued personal medical exclusions, re-declared under full medical underwriting, or parked under a fresh moratorium. Chronic conditions are excluded by every insurer whose wording we hold, and renewal terms change each year, so read the document you are actually offered before you commit.

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