The Financial Conduct Authority (FCA) has started implementing new rules demanding insurers to be more transparent to make it easier for customers to compare deals instead of just renewing their insurance.
Applying to renewals for retail customers, the new rules that came into force on April 1 are aimed at increasing transparency and engagement at renewal in general insurance markets, the FCA said.
Insurance companies are also compelled to identify customers who have renewed for at least four consecutive times and push them further to shop around.
“These rules are intended to encourage consumers to engage with insurance renewal on both cover and price,” the FCA said. “Firms are encouraged to, and should feel free to, communicate the benefits of their products and services in addition to the new disclosure requirements, provided that doesn’t attempt to distract consumers.”
According to the FCA, renewal letters sent from April 1 must include the new transparency disclosures.
“We have written to firms to highlight that they must put in place the new rules and think through how they will apply to their firm. We will be monitoring how firms implement these rules,” the regulator said.
The FCA lamented that pricing practices at the point of renewal have not been transparent and could result in long-time customers paying more than new clients for the same insurance product. The regulator noted that with the new rules taking effect, consumers could save up to £100 million on their insurance renewals this year.
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