The Association of British Insurers and the British Insurance Brokers’ Association have announced new guidelines to ensure long-standing customers are treated fairly compared to new ones.
There is often a difference in premiums between new and existing customers, but the trade bodies say their new commitment should result in “an improvement in the outcomes for long-standing customers” across home, motor and travel insurance.
The guidelines include not supporting “excessive” differences between new customer and renewal premiums, making sure that shopping around at renewal does not foster excessive pricing differences, and clarifying to customers that premium rates may only be low for the first year and will rise thereafter.
ABI chairman Andy Briggs tells the BBC: “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.”
Citizens Advice research suggests long-standing home insurance customers could be paying at least £100 a year more on average than new customers.
Chief executive Gillian Guy says: “The devil…will be in the detail – whether this is successful will depend on prices actually coming down for loyal customers.
“The industry should also work with the FCA to collect better data on the scale of this loyalty penalty. Then we can assess whether this unfair practice is being tackled effectively.”