5th January, 2022
A new rule stopping insurers from quoting higher prices to customers renewing their home or motor insurance policy has recently been introduced.
This new ban will see existing customers treated more fairly in comparison to new customers and will save policyholders an estimated £4.2bn over the next decade.
At One Call Insurance - it’s our job to find our customers the right insurance at the right price, so we welcome these changes on behalf of them and look forward to premiums levelling out for both new and loyal customers.
These new rules were brought in by the FCA* (Financial Conduct Authority) and came into effect on 1st January, after evidence showed that many insurers were increasing prices for customers who renewed year-on-year.
As well as penalising loyal customers with higher prices, the FCA claim that this practise - often referred to as “price walking”, distorted the way the whole insurance market worked.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said: “Our interventions will make the insurance market fairer and make it work better.”
“Insurers can no longer penalise consumers who stay with them.”
“You can still shop around and negotiate a better deal, but you won’t have to switch just to avoid being charged a loyalty premium.”
“We are keeping a close eye on how insurers respond to our new rules, to ensure that the benefits of a better insurance market are delivered to consumers.”
The move has been welcomed by the Association of British Insurers, which said it will remove “excessive price differences in the premiums paid by some new and existing customers for the same policy”.
In addition to fairer pricing strategies, the FCA’s reforms also include new rules that make it easier for customers to cancel the automatic renewal of policies. What’s more, insurers are now required to prove that “their products deliver fair value to customers.”
It’s worth noting that the pricing rules came into effect on 1st January and only apply to renewal notices going out after this point.
Therefore, if you’re a home or motor customer who received a renewal notice in December, but your policy renews after 1st January, the rules would not apply to you.
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* Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.