In a big win for our ‘Don’t pay a premium’ campaign, the Financial Conduct Authority has announced proposals that will require insurers to publish details of last year’s premium on your renewal notice.
The FCA’s proposals are backed by its trial of more than 300,000 UK consumers, which tested reactions to different types of information being provided at renewal stage. Printing last year’s premium on renewal notices had by far the biggest impact, with 11-18% of people switching or negotiating a lower premium on their home insurance.
It’s a simple change and a win for the more than 30,000 people who supported our ‘Don’t pay a premium’ campaign. It should help people save money as our research has found that seeing last year’s premium encourages people to shop around or haggle for a better deal with their current insurer.
Support for printing last year’s premium
Charlie C told us on Which? Conversation last year:
‘My home insurance renewals have just come in and I was just thinking how it would be useful to have last year’s premium printed on the renewal notice… and then saw this!
‘I would support printing last year’s premium and in fact think it is scandalous to see the increases just hidden like this. Mine were set 20% higher this year, with no changes on my side and no claims.’
Treating customers fairly
The FCA is also reminding insurers of their obligations to treat customers fairly, especially their treatment of loyal customers at renewal stage.
Christopher Woolard, director of strategy and competition at the FCA, said:
‘We hope the proposals encourage more people to shop around for the best product for them. It is important that insurers give their customers the information they need to do this and ensure they’re treating their customers fairly.’
The FCA is now asking for feedback on its proposals in a consultation that will close on 4 March 2016. We’ll be responding on behalf of the more than 30,000 people who backed our campaign – this is your win!
Update: 16 August 2016
Some good news finally emerged from the FCA last week with an announcement for implementation of the new rules for insurers and renewals notices – so it’s still a win for the campaign!
However, the expectation had previously been for these new rules to be in force by 1 January 2017, but firms must now comply by 1 April 2017.
The FCA has stated that information should be included clearly, accurately and prominently at renewal, and in a place that makes it easy to compare with the renewal quote. If adjustments were made over the course of the policy term then the insurer must include an annualised premium that will reflect those changes. This will apply to all annual and 10-month insurance policy renewal notices.
We’re hoping that insurers won’t wait until the last minute to comply with these new rules and start to introduce these changes to help their customers as soon as possible.
Update: 3 April 2017
As of 1 April, insurers must now show the price of last year’s premium on their renewal notices to show customers how much their policy has increased by.
Three years after Which?’s campaign for a more transparent renewal process began, the Financial Conduct Authority (FCA) has made it compulsory for insurers to make their pricing clearer to customers, along with advice about shopping around.
In an attempt to stop longstanding customers paying more for the same cover than new customers do, insurers will also have to identify customers who have renewed with them for four consecutive years.
The renewal notices to these customers must then contain an additional message encouraging them to shop around.
The new rules apply to general insurance products including car and home insurance. The FCA estimates that they will benefit consumers by £64 million to £103 million per year.
Are you due to renew your car or home insurance policy soon? Have you noticed any changes to your renewal notice?