You are here: Home - Insurance - News -

Insurers told to disclose last year’s premiums on renewal notices

Written by: Paloma Kubiak
Home, motor and travel insurance renewals will have to include information about the amount customers paid the previous year, the city regulator has announced.

General insurance providers have been told by the Financial Conduct Authority (FCA) to disclose last year’s premium at each renewal by 1 April 2017.

In addition, renewals will also need to include text to encourage consumers to check their cover and shop around for the best deal.

Further, insurers will be tasked with identifying customers who have renewed with them four consecutive times, and give them extra information to encourage them to compare quotes and cover elsewhere.

Lastly, where a consumer’s circumstances have changed during the course of holding their policy, firms must give an annualised premium reflecting any mid-term adjustments, instead of last year’s premium.

The move comes after the FCA initially proposed the measures in December 2015 following a trial of 300,000 insurance customers which found that showing the previous premium on renewal notices was the best way to increase consumer engagement.

However, Kevin Pratt, consumer affairs expert at MoneySuperMarket, said the measures have failed to address automatic renewal.

He said: “The FCA said it wanted to increase transparency and engagement but it has failed on one of the industry’s worst practices: auto-renewal. Our research shows that consumers are losing out to the tune of £1.3bn a year because of auto-renewals in motor insurance alone – on average that’s a whopping £113 per annum per consumer. The FCA had a real opportunity to be bold and tackle this issue but its measures fall short and consumers are the ones that are going to lose out.

“The frustrating thing is that the FCA’s measures contain the seeds of success. We support, for example, the need to disclose last year’s premium at renewal as well as the targeting of sticky consumers to encourage them to shop around. But ultimately the measures lack teeth and are a piecemeal approach to solving a problem which needs a much more comprehensive set of measures. Most disappointing of all, some of the most potentially effective are merely non-binding guidance, leaving little hope for meaningful adoption by the industry.”

He said the comparison site will be lobbying the government to ensure consumers are informed that when they take out a policy, they are giving permission to be auto-renewed. It will also call for cancelling auto-renewal to be made much easier. “These are just some of the concrete measures we are putting forward. In the meantime, our advice to consumers is don’t get caught out –  shop around for a better deal and you could save hundreds of pounds.”

There are 1 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.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week