No punishment for loyalty under insurance proposals
By Rob Freeman | 22nd September 2020
Insurers could be stopped from charging existing customers more than new clients under proposals from the Financial Conduct Authority.
The FCA said the changes could save people renewing their home or motor insurance policies around £3.7billion over 10 years.
Around 10 million such policies are held by people who have remained the same provide for five years or more rather take the deals offered to new customers.
FCA interim chief executive Christopher Woolard 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."
Research by the regulator found more than one in 10 people were paying high prices for their cover with one third of them vulnerable in some way.
It also said people who switched regularly were likely to be flagged by insurers and find the best deals are not available to them.
Proposals, which could come into force next year, would enable insurers to set prices for new customers but stop them from gradual increases for customers who remain with them.
Huw Evans, director general of the Association of British Insurers, told the BBC: "Insurers and brokers have begun to tackle the issue of excessive price differences between new and existing customers through an industry initiative that has seen over 8.5 million pricing interventions across home and motor insurance worth £641million.
"It is vital that price comparison websites and insurance brokers are subject to the same level of supervision and monitoring by the FCA to ensure a balanced approach."
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