“Radical” plans to ban new insurance customer discounts outlined by UK regulators could be replicated here, actuarial firm Finity has warned.

As insuranceNEWS.com.au has previously reported, the Financial Conduct Authority (FCA) has proposed blocking insurers from pricing practices that disadvantage renewal customers compared to first-time purchasers.

Former NSW Emergency Services Levy Monitor Allan Fels flagged the “loyalty tax” issue during his tenure, estimating it at 34%. However, regulators here have not shown any sign of following the UK’s lead.

But Finity warns in a paper that it is “entirely plausible a similar regulatory focus could arise here in the future”.

The paper says Australian personal lines insurers should at least be discussing the UK changes, and considering their own pricing practices.

“We think that the issue represents an example of a ‘non-financial risk’, carrying downstream financial risks, that companies should be giving some regard,” it says.

See Analysis.