Industry bodies for brokers and insurers have agreed guidelines to halt the controversial practice of dual pricing.
The industry initiative will seek to tackle the existing excessive difference between new customer premium prices and that of renewals for long standing customers.
The issue of dual pricing had the industry slammed from some corners of the press as “insurance pirates” and the Financial Conduct Authority has vowed to tackle the issue.
The guidelines, agreed by the British Insurance Brokers Association and the Association of British Insurers this morning, are specific to personal lines insurance such as home motor and travel products, but not pet or health insurance.
Members of Biba and the ABI will follow the guidelines to equip people with information to help them shop around.
Member of both associations are also being urged to provide customers with verbal or written communications to clarify that the new premium only applies for the first year and subsequent renewal prices may be higher.
“Biba and the ABI take compliance very seriously and nothing we do will breach the FCA’s price competition laws,” said White.
“We are not telling firms what is the minimum or maximum price for policies for new customers or at renewal and there is, under the guidelines, no definition of what is excessive. It’s not going to be an overnight change and these guidelines will not equal out prices of renewal or new business pricing, but it will improve prices for customers and reward long-standing customers for loyalty.”
The guidelines suggest that members who impact the final premium paid by customers should review their pricing approach for customers who have been with them longer than five years and assess whether this approach delivers a fair outcome.
A spokesperson from the ABI told Post: “It will ultimately be up to individual companies to implement the principle of the guidelines in their own way. Anything constrictive would breach the FCA’s competition laws. The ABI and Biba have recognised that there are issues around pricing and we are taking steps to ensure they are being addressed.”
The two organisations will be publishing a report within two years’ time which will examine how members sought to tackle excessive difference in pricing of new business and renewals.
Zurich disappointed in new #discountrate. David Nichols, Ch Claims Officer: "The failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance - especially for higher risk customers." pic.twitter.com/ac1CfBzfxX— Zurich Insurance UK (@ZurichInsUK) July 15, 2019
- Revealed: Leaked emails show Ecclesiastical staff using 'callous' language over child abuse claims
- Young driver curfew plans 'could have deadly consequences'
- Aviva's Neos hopes to double UK customer base by year end
- Blog: Fires and cars - spontaneous combustion is 'use'
- Opponents of diversity 'shouldn’t be working in this marketplace': Miller CEO
- Money Supermarket clone site shut down
- Analysis: SME risk management: Loss of appetite