Proposals will address concerns that some consumers pay higher prices if they stay with the same insurer - FCA
Insurers could be made to publish prior year premiums on renewal notices, under proposals announced by the FCA today.
The regulator said the proposals aimed to address concerns that some consumers paid higher prices if they stayed with the same insurer, particularly for a long period of time.
The FCA added it had found evidence of low levels of consumer engagement, switching, and a lack of competition when some types of insurance policies are renewed.
The FCA is also proposing:
- firms identify and specifically prompt those consumers who have renewed the same product four times or more to encourage them to engage;
- guidance on how firms can improve their processes around renewals to deliver greater clarity and better outcomes for consumers; and
- guidance that firms maintain records of past premiums.
The deadline for feedback on the proposals is 4 March 2016.
FCA director of strategy and competition Christopher Woolard said: “We hope the proposals encourage more people to shop around for the best product for them.
“It is important that insurers give their customers the information they need to do this and ensure they’re treating their customers fairly.”
In 2014, the FCA launched a trial with over 300,000 consumers across the UK to test reactions to different types of information provided at renewal and whether this prompted people to switch.
The inclusion of the prior year premium on renewal notices had the greatest impact, prompting between 11% and 18% of people to either switch provider or negotiate a lower premium when prices sharply increase.
The FCA also tested three other disclosure options:
- simplified renewal notices that reinforced key messages such as the right to cancel and switch
- sending shopping around leaflets with renewal letters
- reminders sent through different media, including email, letter and text messages
Back in July the FCA revealed it would begin consultations in the autumn to help consumers shop around for the best deal when renewing their insurance policies.
The move followed announcements in the budget speech by Chancellor of the Exchequer George Osborne, which said if people compared the different options available for their insurance they could generally get a much better deal.
AXA has previously said it would start displaying the previous year’s premium on motor renewals. The insurer says it will follow this up with household and business renewals.