UK Regulator bans insurance companies from discriminating between new and existing customers

Brendan Burgess

Brendan Burgess

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This is great news.

FCA confirms measures to protect customers from the loyalty penalty in home and motor insurance markets

The FCA has implemented a package of remedies to improve competition and protect home and motor insurance customers from loyalty penalties. This includes new rules so that renewal quotes for home and motor insurance consumers are not more expensive than they would be for new customers.
www.fca.org.uk www.fca.org.uk

The FCA’s new rules will stop firms price walking. Insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer. It is likely that firms will no longer offer unsustainably low-priced deals to some customers. However, the FCA estimates that these measures will save consumers £4.2 billion over 10 years, by removing the loyalty penalty and making the market work better.

It establishes a principle and bolsters my argument that lenders should be prohibited from discriminating between new and existing mortgage lenders.

Brendan
 
I don't get your obsession with this. Discounts for new customers can be found in thousands of markets. Why single out insurance and mortgages?

Price discrimination can make everyone better off. Gouging lazy customers can cross-subsidise products for frugal customers.

If you ban this practice you'll find firms will stop offering certain products entirely.
 
I think something similar is planned for here.

Pity it doesn't extend to SKY tv, Electricity suppliers, gas suppliers, broadband suppliers etc.

The savings on any one of these would far exceed the insurance savings for most people.
 
"Insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer."

So, given than many new customers wouldn't have a no claims bonus, presumably this will mean the end of no claims bonuses?
 
Shirazman said:
So, given than many new customers wouldn't have a no claims bonus, presumably this will mean the end of no claims bonuses?
Click to expand...

That's not really a fair comparison. A new customer with 3 years no claims bonus should be treated the same as an existing customer with 3 years no claims bonus that's the point.

In simple terms your claims history should still be a factor in your premium calculation. They just can't charge you extra for inertia.

I do wonder in the long run if this will be counterproductive. Inertia is likely to increase if people feel they are less likely to get gouged by their providers.

On balance increased information and improving consumer awareness is surely a better objective. The likes of bonkers.ie have been a welcome addition to the energy market. That should be the aim. I appreciate the insurance is more complex but technology can do the heavy lifting.
 
skrooge said:
That's not really a fair comparison. A new customer with 3 years no claims bonus should be treated the same as an existing customer with 3 years no claims bonus that's the point.

In simple terms your claims history should still be a factor in your premium calculation. They just can't charge you extra for inertia.
Click to expand...

Yep. On reflection, my interpretation of that sentence was, to use a popular political term, completely arseways! :eek:
 
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