Insurance industry to face probe into fair pricing

THE CITY regulator is investigating how fair insurance companies are being when charging customers for home and motor cover.

The Financial Conduct Authority (FCA) said the market study into firms’ pricing practices will give it a deeper understanding of the scale of any harm to consumers and who it affects.

If necessary, the FCA will intervene to improve the market, it said.

The regulator has raised concerns that some pricing practices could potentially disadvantage consumers significantly, in particular the most vulnerable and least-resilient.

Practices it is concerned about include “loyalty pricing” where existing customers may be charged higher prices than new customers; as well as firms potentially charging different prices to different consumers based solely on how “price sensitive” customers are.

FCA chief executive Andrew Bailey said: “Our initial work has identified a number of areas of potential consumer harm. We want to make sure that general insurance markets deliver competitive and fair prices for all consumers.

“This market study will help us examine the outcomes from general insurance pricing practices and inform how, if necessary, we should intervene to improve the market.

“If change is needed to make the market work well for consumers, we will consider all possible remedies to achieve this.”

The regulator said it expects firms to look after the interests of all customers and treat them fairly, whether they are new or long-standing, and has written to chief executives of firms about its expectations.

Insurance plays a key part in the UK economy, generating more than £78bn in premiums for UK insurers, it said.

The FCA aims to publish a final report and, where required, consultation on proposed remedies by the end of 2019.