Insurers pledge fairer premiums for long term customers
The insurance industry has pledged to crack down on “excessive” differences in premiums for new customers and existing policyholders.
The plan aims to iron out some of the controversial big differences between premiums for new and existing clients.
The move follows new rules that force firms to display the previous year’s premium on renewal notices.
The new guidelines apply to home, motor and travel insurance, but not pet or health cover.
The Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) say their Guiding Principles and Action Points should mean “an improvement in the outcomes for long-standing customers”.
The new commitments by ABI and BIBA members include:
- Not supporting excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers
- Members will take action so that customers’ tendency to shop around at renewal is not used to lead to excessive pricing differences that unfairly penalise long-standing customers.
- Firms should make clear in written, online or verbal customer communications that the new customer premium only applies for that year and subsequent renewal premiums may be higher.
ABI chairman Andy Briggs said insurers did a “great job” for their customers, “but the renewal market simply doesn’t work where loyal customers get charged much more than new customers”.
“Given many consumers expect to get cheaper insurance when they shop around, there is no easy solution,” he added.
“These new guiding principles and action points are a positive initiative by the ABI and BIBA members to demonstrate that the whole industry recognise this is an important issue that needs to be addressed.”