FCA & 'price walking'

[Stuart21UK]

When it comes to car insurance I'm a consumer like everyone else (not a product I arrange myself)...whether many people are aware or not, the following will now apply:

 

 

FCA CONFIRMS MEASURES TO PROTECT CUSTOMERS FROM THE LOYALTY PENALTY IN HOME AND MOTOR INSURANCE MARKETS

The FCA has implemented a package of remedies to improve competition and protect home and motor insurance
customers from loyalty penalties.

This includes new rules, so that renewal quotes for home and motor insurance consumers are no more expensive
than they would be for new customers.

These measures address the issues identified in the FCA’s September 2020 market study, which found that millions of
home and motor insurance customers lose out if they renew repeatedly with their current providers.
In 2018, 6 million loyal policy holders would have saved £1.2 billion had they paid the average price for their actual
risk.

Many firms increase prices for existing customers each year at renewal – this is known as “price walking”. This means
that consumers have to shop around and switch every year to avoid paying higher prices for being loyal.

It also distorts the way the market works for everyone. Many firms offer below-cost prices to attract new customers.

They also use sophisticated processes to target the best deals at customers who they think will not switch in the future
and will therefore pay more.

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 consumers 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

 

 

 

A very good thing I think but where does that leave comparison sites? Will they cease to show savings as large as to date going forward?

discuss!

[Quinten]

Your renewals "may" be cheaper now, so there may be less incentive to shop around, but you may still be cheaper by shopping around for other companies.

[map]

Or could this "package of remedies" mean that "new customer" prices will go up?

[Menoporsche]

Can’t please all of the people all of the time...

[RoryD]

1 hour ago, map said:

Or could this "package of remedies" mean that "new customer" prices will go up?

I would imagine so, can’t see any company volunteering to reduce their revenue. Reduced renewals will be offset by less attractive offers for those who shop around.

 

Cheers

Rory

[red rocket]

 

27 minutes ago, RoryD said:

I would imagine so, can’t see any company volunteering to reduce their revenue. Reduced renewals will be offset by less attractive offers for those who shop around.

 

Cheers

Rory

Precisely.

[Oldboy 63]

Just had our building and contents renewal come and it’s £5 cheaper than last year.Wondering if that is the reason why?.

[944GS]

I just received my bike renewal from Carol Nash which has gone up, not by much but I was still able to save £30 going somewhere else.

I called to tell them I was leaving and was immediately offered a discount so I politely explained that I would have stayed if they’d offered me that as a renewal price then I went away and purchased with the cheaper company.

[craigjam]

Doesn't this not kick in until January next year? Just this week I got a quote 70 quid cheaper as a new customer than a renewal...

[Stuart21UK]

Can't remember when it's effective but changed regulations are usually adopted sooner by those that they affect, they'll be a cut off date 

I've had one a buildings insurance policy renewal yesterday, went down a few pence per month