The Association of British Insurers (ABI) has voiced its support for the Financial Conduct Authority’s (FCA) proposals to improve pricing issues within the insurance market.
The FCA has proposed significant reforms to tackle ‘price walking’, the process by which new customers are able to take advantage of low rates, while existing customers see renewal prices gradually rise over time.
Huw Evans, director general of the ABI, agreed that this is an issue that should be addressed: “The ABI agrees with the FCA that the household and motor insurance markets do not work as well as they should for all customers, and we continue to support the FCA’s work to address this.”
FCA sets out proposals regarding general insurance pricing concerns
He added that some in the market are already working to reduce the price differences that result from the practice of price walking, and that these efforts need to be replicated across the sector.
Evans said: “Insurers and brokers have already begun to tackle the issue of excessive price differences between new and existing customers through an industry initiative that has seen over 8.5 million pricing interventions across home and motor insurance worth £641m.
“It is vital that price comparison websites and insurance brokers are subject to the same level of supervision and monitoring by the FCA to ensure a balanced approach.
”We will consider carefully this package of proposals, so that we can engage with the FCA on the most effective measures possible.
“There are winners and losers in the way the market works currently with those who switch insurance provider every year often ending up with lower prices.
“The FCA has confirmed that insurers have not made excessive profits.”
Scott Mowbray, co-founder of Snoop, added: “The FCA’s proposals are welcome.
“For far too long insurers have been able to sting consumers with unfair renewal pricing which always hits those that can least afford it the hardest.
“Ensuring car and home insurance customers pay no more than new customers should kill the loyalty penalty but it will still be important for consumers to shop around for the best deal at the point of renewal”.