The Financial Conduct Authority (FCA) has published its policy statement outlining the new rules to be implemented by the regulator in relation to general insurance pricing practices.
“Our rules ensure that renewing home and motor insurance consumers are quoted prices that are no more than they would be quoted as a new customer through the same channel,” said the watchdog, whose policy statement is available on the FCA website.
“We are also making it simpler for customers to stop automatic renewals if they wish to do so. We are also introducing new product governance rules to ensure that firms deliver fair value on all their insurance products.”
According to the regulator, the rules supersede the General insurance distribution chain: Finalised guidance for insurance product manufacturers and distributors, which will be withdrawn upon the rules’ effectivity dates. Meanwhile, some of the new rules also apply to insurers and intermediaries of other general insurance and protection products.
In the 87-page policy statement, the FCA noted: “Our rules on pricing, auto renewal, and reporting will come into effect on January 01, 2022, with a transitional provision for the rules on pricing and auto-renewal disclosure. This allows firms until January 17 to have their processes in place, providing they backdate benefits to customers to January 01.
“Our rules on systems and controls, retail premium finance rules, and product governance come into effect on October 01, 2021."
By removing the so-called “loyalty penalty” and making the market work better, the watchdog expects consumers to save an estimated £4.2 billion over a period of 10 years.
“These measures will put an end to the very high prices paid by many loyal customers,” said FCA executive director for consumers and competition Sheldon Mills. “Consumers can still benefit from shopping around or negotiating with their current provider – but won’t be charged more at renewal just for being an existing customer."
“We are making the insurance market work better for millions of people. We will be watching closely to see how the market develops in the future and to ensure firms continue to deliver fairer value to consumers.”