Large modifications in auto insurance might lead to motorists “paying larger costs” – Categorical
Starting today, January 1st, 2022, measures will be taken to protect drivers from the loyalty penalty in the home and car insurance market. Loyalty penalties, or price walking, are a pricing practice where existing customers are billed more and more the longer they stay with the same insurer.
He said: “These measures will put an end to the very high prices of many loyal customers.
“Consumers can still benefit from shopping or negotiating with their current provider – but they will no longer be charged when they renew just because they are an existing customer.
“We're making the insurance market work better for millions of people.
"We will monitor closely how the market moves in the future and to ensure that companies continue to provide fairer value to consumers."
“It is therefore right that measures should finally be taken to put an end to these unfair practices.
“It is critical that the regulator keeps a close eye on insurance companies to ensure they are not finding new ways to take advantage of customers and should be ready to take further action if necessary.
"There is still a need for more transparency into the factors insurance companies use to set prices, and the FCA should conduct further research to see if there are other practices that companies should be prohibited from using," Shaw said.
Many insurers have spoken out in favor of the measures, emphasizing the transparency that is offered to motorists in their search for the best insurance.
Charlotte Clark, Director of Regulation for the Association of British Insurers, said, “Insurers support these reforms and will continue to work closely with the FCA to ensure that they are carried out effectively.
“While the FCA recognizes that its interventions could lead to price increases for consumers who shop regularly, these remedial measures should ensure that all customers get fair results from competitive insurance markets.
"It is critical that the new rules are applied across the insurance market, including price comparison websites and insurance brokers, with a consistent level of supervision and oversight by the FCA to ensure good customer results."