Recently, an interim report was published by financial conduct authority regarding their market study on the pricing of home and motor insurance. Pricing within these markets does not work very well as consumers restrict themselves from switching or negotiating with providers that have expensive insurance. FCA has identified competition in these markets as not being adequate from all consumers, affecting the pricing dramatically within the markets.
An estimation of 6 million was made by the FCA referring to the number of policyholders that are paying ridiculously high prices on their insurance. Customers who paid for high premiums could save up to £1.2 billion if they paid for the average premium minimizing risk. A considerable amount of people became vulnerable by having a low financial capability as data from the regulator consumer research shows that 1 in 3 consumers reveal one characteristic or more of vulnerability. Higher margins are paid by consumers who buy joint content and building insurance with a budget of below £30,000, paying more than someone with a higher income.
A variety of activities have been set up by the FCA to address any problems that may occur or has been identified. In 2017 a new rule was established, therefore, FCA has upgraded its transparency regarding a renewal on general insurance policies, helping customers with a low income to save a considerable amount of money. Also, FCA could be banning or restricting the increase of prices for consumers that renew their insurance year on year or inform firms to allow consumers to have the option to transfer over to a cheaper deal.
About Stuart Mosley
Stuart Mosley (CeFA, CeMap, CLTM) founded SJ Financial Solutions in June 2005 having spent 12 years with big corporates such as Halifax and Santander. He felt the personal touch and straight speaking was missing from financial and mortgage advice services and set up SJ Financial Solutions to change this.
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