The Finance Conduct Authority (FCA) has revealed that it has implemented a package of remedies to improve competition and protect home and motor insurance customers from loyalty penalties, which will come into effect on 1 January 2022.
The package includes new rules so that renewal quotes for home and motor insurance consumers are not more expensive than they would be for new customers.
These measures address the issues identified by the FCA in its September 2020 market study, which found that millions of home and motor insurance customers lose out if they renew repeatedly with their current providers.
The new rules will aim to stop firms’ price walking, with insurers required to offer renewing customers a price that is “no higher” than what they would pay as a new customer.
The FCA estimates that these measures will save consumers £4.2bn over 10 years, by removing the loyalty penalty and making the market work better.
In addition to the new rules on pricing for home and motor insurance, the FCA is also bringing in new rules to give consumers easier methods of cancelling thefca automatic renewal of their policy and require insurance firms “to do more” to consider how they offer fair value to their customers.
Additionally, it requires home and motor insurance firms to report data to the FCA so that it can supervise the market more effectively.
Sheldon Mills, executive director, consumers and competition at the FCA, said: “These measures will put an end to the very high prices paid by many loyal customers. 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.”