Hard-pressed communities paying most for home insurance, says FCA pricing study

The FCA’s interim report into general insurance pricing has found that those living in the poorest communities are being charged on average more for their home insurance than other customers. 

It looked at the issue of ’vulnerable’ consumers being hit hardest by pricing practises. It defined vulnerable as ’someone who, due to their personal circumstances, is especially susceptible to detriment’.

The report found that 1 in 3 consumers in its research who paid high prices ”showed at least one characteristic of vulnerability, such as having low financial resilience or capability”.

 ”For consumers who bought combined contents and building insurance, lower income consumers (below £30,000) pay higher margins than those with higher incomes,” it said.

It explained the findings by suggesting that high margin home customers are less comfortable buying financial products online.

”Both home and motor high margin customers report lower levels of insurance knowledge in some cases.

”If low margin policies were only accessible to customers who were comfortable buying financial products online, or had relatively high self-reported knowledge about insurance products, vulnerable customers without these characteristics could be excluded from accessing low margin offers,” it postulated.

The report added that there were signs younger drivers might be paying higher margins, but it found no consistent evidence that older drivers were paying higher margins than younger.