Home / International / UK action on loyalty penalties 'benefitting millions'
13 July 2020
UK insurers and brokers say industry action to prevent loyal customers being disadvantaged by renewal pricing increases is delivering improved results for long-term policyholders.
The Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) have released reviews on the performance of guiding principles and action points introduced two years ago amid Financial Conduct Authority (FCA) concerns.
The ABI says all firms surveyed have introduced a renewal pricing review process and 94%, by gross written premium, have focused on customers who have been with them for five or more years.
There were 8.5 million pricing interventions across motor and home insurance over 20 months, worth a total value of £641 million ($1.15 billion). Average savings reported by firms ranged between £40 ($72) and £150 ($270) in the majority of cases.
“The number of insurer interventions and range of average savings are benefitting millions of customers,” ABI Director, General Insurance Policy James Dalton said.
“There remains more to do, and we will continue to work with the FCA in its general insurance pricing review.”
BIBA says insurers have made “great strides” to bring new business and renewal pricing into line, with premium capping systems in place and some dual pricing approaches ended entirely.
Brokers have embraced the guiding principles and action points, with systems adopted often aimed at more vulnerable consumers.
System-generated renewal pricing increases are being queried with insurers, with brokers discussing the reason and negotiating a lower premium if possible.
“In light of the success of this voluntary action by both brokers and insurers, it is clear that the FCA needs to note the positive impact,” CEO Steve White said.
BIBA says auto renewal processes should be allowed to continue, although on an opt-in basis.
“All customers are different and sometimes the safety net offered by an auto renewal process ensures continuance of motor insurance required by law or home buildings insurance often necessary under a mortgage,” Mr White said.