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UK watchdog proposes ban on car, home insurance 'loyalty penalties'
[LONDON] Britain's Financial Conduct Authority (FCA) said on Tuesday it was proposing to stop insurers from charging more to repeat car and home insurance customers than to new clients.
When a customer renews their home or motor insurance policy, they would be paying no more than they would if they were new to their provider through the same sales channel, such as online,the FCA said.
"The FCA estimates that its proposals will save consumers £3.7 billion (S$6.46 billion) over 10 years," said Christopher Woolard, the FCA's interim chief executive.
It singled out "price walking" or complex pricing practices that allow insurers to raise prices for consumers who renew their car and home insurance policies year after year.
The aim is to stop loyal customers being penalised, the FCA said on Tuesday.
It identified six million policyholders paying high or very high margins in 2018, who could have saved £1.2 billion.
"For existing consumers, their renewal price would be no higher than the equivalent new business price," the watchdog said.
The FCA is also proposing rules requiring insurers to consider how they offer fair value to customers over the longer term, and to report data to the watchdog so that it can check the new rules are being followed.
The proposals are being put out to public consultation until January, with final rules published next year.