The Financial Conduct Authority (FCA) has implemented a package of remedies to protect home and motor insurance customers from loyalty penalties. This includes new rules so that renewal quotes for home and motor insurance customers are not more expensive than they would be for new customers.
The FCA’s conducted a study in 2020 which found that millions of home and motor insurance customers lose out if they renew repeatedly with their current providers.
Many insurance companies increase prices for existing customers each year at renewal – this is known as “price walking”. This means that customers have to shop around and switch every year to avoid paying higher prices for being loyal.
The FCA’s new rules will stop firms price walking. Insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer.
In addition to the new rules on pricing for home and motor insurance, the FCA is also bringing in new rules to:
- give most customers easier methods of cancelling the automatic renewal of their policy,
- require insurance firms to do more to consider how they offer fair value to their customers, and
- require home and motor insurance firms to report data to the FCA so that it can supervise the market more effectively
The pricing, auto-renewal and data reporting remedies came into effect on 1 January 2022.
The FCA will continue to monitor the insurance market closely to ensure firms implement the pricing changes.
Emily Griffiths a trainee solicitor at Nantes said “we lead busy lives and it is so easy to simply renew your insurance each year rather than shop around. Many people are also tied into auto-renew without knowing it. I hope these changes that should be taking effect now will help save customers money on car and home insurance at a time when the cost of living is already very high”.
