Some customers are paying more for their car and home insurance when they renew with their current provider, compared to if they were a new customer.
A new proposal announced by The Financial Conduct Authority aims to make this fairer for loyal customers. This proposal suggests that if a customer had purchased the policy by telephone years ago, they would pay the same premium as a customer buying the same product by telephone today.
Insurers have been known to use complicated and unclear pricing practices which allow them to increase prices for loyal policyholders who stay with them and renew year on year. Although some people do look around for new deals before their renewal, many are experiencing higher renewal premiums for being a loyal customer.
Research from The FCA suggests that there could be up to six million policyholders that are affected by the current situation. In addition, they had found that there could be £1.2 billion of savings to be made if they were to switch.
This proposal also looks at other measures for increasing the competition further to provide fairer value insurance to all customers.
These measures include:
- Making it simpler to stop automatic renewals across all general insurance products.
- Placing a requirement on firms to report specific data sets to the Financial Conduct Authority so that they can check if these firms are following the rules.
- Product governance rules to require firms to consider how they offer fair value to all insurance customers over the long term.
The consultation is scheduled to be completed by the 25th January 2021. This will be followed by a policy statement and updated rules next year.
There is a variety of options available to help customers understand what cover they have taken out and the price, regardless of how long customers have held their insurance policy for.
If you would like to check if a home insurance policy is priced competitively for the type and the content of your home, you can always talk to us.
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.
If you would like to book an appointment then please get in touch and we can arrange a suitable time to discuss further. We can arrange appointments at a place and time suitable to you, we can discuss your options over the phone or if you prefer email, then this is fine with us.