UK industry acts on issue of ‘loyalty penalties’
British insurers and brokers have released a set of “guiding principles and action points” to tackle pricing practices that penalise loyal customers in personal lines cover.
The Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) say they do not support excessive differences between new customer premiums and renewal prices, and have committed to better outcomes.
The groups will publish a report within two years to show how members have responded to measures proposed to address the issue.
“Given many consumers expect to get cheaper insurance when they shop around, there is no easy solution,” ABI Chairman Andy Briggs said. “These new guiding principles and action points are a positive initiative by the ABI and BIBA members to demonstrate the whole industry recognises this is an important issue that needs to be addressed.”
The principles apply to products such as home, motor and travel, but not pet or health insurance. Commitments include making it clear to new customers that an introductory premium applies for that year only and subsequent renewals may be higher.
The principles support disclosing previous-year prices on renewals and say the ethos of better outcomes for longstanding customers should be given board or senior management-level priority and incorporated into procedures for determining renewal premiums.
The groups also support the Financial Conduct Authority taking the guiding principles and action points into account when supervising pricing practices.