Insurers' offering cheaper quotes for new business than for renewals
Biba has accused several major insurers of “buying in” business by offering cheaper quotes for new business than they do for renewals.
Peter Staddon, Biba’s head of technical services, said brokers had resorted to falsely entering existing customers with no claims history into the insurers’ systems as new business.
Staddon said it was because the premiums were about £100 cheaper.
He added: “There are huge discrepancies. They are trying to buy in business and it’s really calling into question the integrity of the market.”
Staddon said it should be cheaper to renew a policy for a client with no claims history than it is to bring in a new customer.
He said: “I’m talking to insurance companies and asking them to justify this.”
An ABI spokesman said he was not aware of such practices, but added that renewal rates were sometimes higher even when a policyholder has not had a claim.
He said: “What insurers do is consider the risk. A new customer may have taken steps to reduce a particular risk. Insurers want to attract customers but at the same time it will be at rates that properly reflect the risks.”