New car insurance regulations give loyal customers a leg up
Insurers face crackdown on vast price differences between introductory and existing premiums
Shopping around for car insurance can be a paint, but a new announcement may have just made it a little easier.
Insurance watchdogs have today announced plans to crack down on the so-called ‘loyalty penalty’ forced on customers who don’t change provider each year, giving buyers greater freedom when it comes to covering their car.
The Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) launched the proposals, which would reduce the incidence of loyal customers paying excessively high premiums while new customers are attracted with artificially low introductory offers.
— BIBA (@BIBAbroker) May 8, 2018
The move encompasses not just motor insurance, but also home and travel. Health and pet insurance was deemed too complicated to include as renewal may be forced to cover medical conditions that did not exist when the policy was first taken out.
The key commitments that the two associations intend their members to adhere to include clear written or verbal communication that subsequent premiums after the first year may be higher, ensuring that introductory discounts do not penalise long-standing customers.
Andy Briggs, chairman of the ABI, said: “The renewal market simply doesn’t work where loyal customers get charged much more than new customers.
We want the insurance market to work as well as possible for everyone. The industry has agreed a new set of Guiding Principles and Action Points to tackle excessive differences between new customer premiums and renewals for long-standing customers. https://t.co/bExMfP21rJ
— Huw Evans (@huwevans71) May 8, 2018
“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 recognises this is an important issue that needs to be addressed.”
The guidance follows the introduction of rules forcing insurers to display the previous year’s premiums on renewal notices.