Daily Express

Move to end rip- off in­sur­ance re­newals

- By Steph Spyro Business · Consumer Goods · Insurance · Society · Financial Conduct Authority · Citizens Advice

HOME and mo­tor in­sur­ance cus­tomers should pay no more when re­new­ing their pol­icy than they would if they were new to their provider.

The pro­pos­als from the Fi­nan­cial Con­duct Au­thor­ity ( FCA) would ap­ply through the same sales chan­nel, such as buy­ing the pol­icy on­line.

Firms would be free to set new prices but would be pre­vented from grad­u­ally in­creas­ing the re­newal fee over time – known as “price walk­ing” – other than in line with a in­di­vid­ual’s risk.

Ten mil­lion poli­cies across home and mo­tor in­sur­ance are held by peo­ple who have been with their provider for five years or more.

New cus­tomers pay on av­er­age £ 285 for their car in­sur­ance while those who have been with their provider for over five years pay £ 370, ac­cord­ing to a study by the FCA based on typ­i­cal risk. And those tak­ing out build­ings in­sur­ance are of­fered £ 130 to be a first- time cus­tomer while peo­ple who stay loyal can ex­pect to pay £ 238.

The City reg­u­la­tor es­ti­mates its pro­pos­als will save peo­ple £ 3.7bil­lion over 10 years. Christo­pher Woolard, in­terim chief ex­ec­u­tive of the FCA, said: “We are con­sult­ing on a rad­i­cal pack­age that would en­sure firms can­not charge re­new­ing cus­tomers more than new cus­tomers in fu­ture and put an end to the very high prices paid by some long- stand­ing cus­tomers.

“The pack­age would also en­sure that firms fo­cus on pro­vid­ing fair value to all their cus­tomers.”

The FCA set out a pack­age of pro­posed reme­dies to help ramp up com­pe­ti­tion be­tween providers, as it pub­lished the fi­nal re­port of its mar­ket study into the pric­ing of home and mo­tor in­sur­ance. The reg­u­la­tor is also con­sult­ing on other new mea­sures to boost com­pe­ti­tion and de­liver fair value to all in­sur­ance cus­tomers.

These in­clude prod­uct gov­er­nance rules re­quir­ing firms to con­sider how they of­fer value to all in­sur­ance cus­tomers over the longer term.

Dame Gil­lian Guy, chief ex­ec­u­tive of Ci­ti­zens Ad­vice, said: “We’re pleased to see the FCA is propos­ing strong ac­tion to crack down on this sys­tem­atic scam. We’re es­pe­cially happy to see it tack­ling price walk­ing – grad­ual year- on- year price in­creases – and mak­ing com­pa­nies au­to­mat­i­cally switch their cus­tomers to bet­ter deals.”

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