The UK regulator is set to impose a ban on insurance companies from charging additional fees for existing customers compared to the new ones. It is reported that these charges are in particular to motor and home cover to help customers save £3.7 billion over 10 years.
Huw Evans, director-general of Association of British Insurers told the media, “There are winners and losers in the way the market works currently, with those who switch insurance providers every year often ending up with lower prices. The FCA has confirmed that insurers have not made excessive profits.”
The ban is in fact expected to stop automatic renewal, according to the regulator. The reason for the ban is because car and home insurance markets are not beneficial for customers. It is reported that consumer group Which? was open to the new rules introduced by the authority.
In fact, insurers and brokers have already started to address the issue associated with price differences between new and existing customers in the industry. It is reported that industry has observed more than 8.5 million ‘pricing interventions’ in home and motor insurance worth £641 million. However, several insurance companies across the country will begin to adhere to the rules introduced by the Financial Conduct Authority.