You are here: Home - Insurance - News -

Insurance industry tackles ‘loyalty penalty’

0
Written by: Paloma Kubiak
08/05/2018
Insurers and brokers have committed to tackle the excessive differences in premiums paid by loyal customers and those buying for the first time.

The Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) are to address issues in the current market including where long-standing customers are penalised with higher renewal prices.

As part of its Guiding Principles and Action Points published today which affects home, motor and travel insurance but excludes pet and health insurance, a series of commitments have been made:

  • No support for excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers
  • Action will be taken so that customers’ tendency to shop around at renewal isn’t used to lead to excessive pricing differences that unfairly penalise loyal customers
  • ABI and BIBA members should make clear in written, online or verbal customer communications that new customer premiums only apply for that year and subsequent renewal premiums may be higher
  • For customers who have been with an insurance firm longer than five years, members should review their pricing approach and assess whether this approach delivers a ‘fair outcome’
  • To publish a report in no more than two years’ time demonstrating how excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers have been tackled.

ABI chairman, Andy Briggs, said: “Insurers do a great job for their customers, providing peace of mind and financial help when they most need it, 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. 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.”

The commitments come after the industry was also tasked with making insurance renewals more transparent as they have to display the previous year’s price on premium documents.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Calls for flat rate pension tax relief and NICs for post-retirement workers

A leading think tank has published a number of reforms to tackle the challenges of ‘intergenerational fairness’. Some have been...

Close