ABI and Biba launch new set of guidelines to tackle the huge differences between new customer premiums and renewals

The ABI and Biba have today launched a guide to help solve large differences in premiums for new and long-standing customers - commonly known as dual pricing. 

The trade bodies hope the guide, if stuck to, will quell outrage against a market which they admit ‘doesn’t work’ for loyal customers. 

As well as the FCA’s renewal transparency rules, a long list of charities, customer research groups and customer bodies have expressed deep concern that loyal customers - frequently the elderly and vulnerable - are charged more than new customers. 

The issue is so big it has caught on at Westminster, where there is now growing calls to intervene on the issue. 

However, the ABI and Biba say members will see an improvement in the outcomes for long-standing customers.

The Guiding Principles and Action Points (GPAPs) apply to personal lines products such as home, motor and travel, but not pet or health insurance.

The commitments include:

  • “ABI and BIBA members do not support excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.”
  • “ABI and BIBA members will take action so that customers’ tendency to shop around at renewal is not used to lead to excessive pricing differences that unfairly penalise long-standing customers.”
  • “The ethos and approach to better outcomes for long-standing customers will be given board or senior management level priority and formally incorporated into firms’ procedures for determining the premium at renewal.”
  • “ABI and BIBA members should make clear in written, online or verbal customer communications that the new customer premium only applies for that year and subsequent renewal premiums may be higher.”
  • “ABI and BIBA members who impact the final premium paid by customers should review their pricing approach for customers who have been with them longer than five years and assess whether this approach delivers a fair outcome.”
  • “The ABI and BIBA will publish a report in no more than two years’ time that demonstrates how ABI and BIBA members have sought to tackle excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.”


ABI chairman, Andy Briggs said: “Insurers do a great job for their customers, providing peace of mind and financial help when they most need it, but the renewal market simply doesn’t work where loyal customers get charged much more than new customers.

“Given many consumers expect to get cheaper insurance when they shop around, there is no easy solution. These new Guiding Principles and Action Points are a positive initiative by the ABI and Biba members to demonstrate that the whole industry recognise this is an important issue that needs to be addressed.”

Lord Hunt of Wirral, chairman of Biba said: “It is part of the DNA of insurance brokers to put the best interests of the client first. That is why I am so delighted that insurers and brokers have come together for the benefit of our established and loyal customers, setting out a positive path forward on renewal pricing. I would encourage everyone within the wider market to join with us in adopting these guiding principles and action points.”

Citizen’s Advice has welcomed the announcement.

Chief executive, Gillian Guy said: “Today’s announcement shows the industry recognises the scale of this problem and is willing to act responsibly to stop consumers being penalised for their loyalty. Our research found that long-standing home insurance customers can pay an average of £110 more a year than new customers.

“The devil, however, will be in the detail - whether this is successful will depend on prices actually coming down for loyal customers.

“The industry should also work with the Financial Conduct Authority to collect better data on the scale of this loyalty penalty. Then we can assess whether this unfair practice is being tackled effectively.”

Companies already have to display the previous year’s premium on renewal notices, after new rules were introduced in April.