Earlier this month, on 1st April, new insurance renewal rules were introduced to improve the way that brokers handle renewal policies with their customers.
The FCA brought out changes to ‘increase transparency and engagement at renewal in general insurance markets’.
The FCA carried out a consultation in December 2015 which concluded to 113 responses. In addition to the consultation they based their research on complaints and a trial which included 300,000 people. In the trial they assessed whether ‘improved disclosure can help consumers become more engaged at renewal’ with 1 home insurer and 2 motor insurers.
They found that many policies were renewed with price increases that were not obvious to the customer. Additionally they found that some longstanding customers were paying more for the same policy that new customers were purchasing.
The New Insurance Renewal Rules
The new insurance renewal rules are to help customers understand clearly the policy they are renewing, as well as encourage them to shop around. This is to make sure they are happy with the cover they are taking out at the best price.
The new insurance renewal rules address how customers will be treated when they wish to switch providers or terminate their cover.
The new rules are as follows:
- The previous year’s premiums will be outlined to the customer.
- The broker will encourage the customer in writing to shop around and explore other cover. This is to see if they are getting the best insurance for them and their needs.
- If a customer has renewed 4 consecutive times with the same policy, give them additional encouragement to shop around.
The full paper on what the FCA’s found and the changes they have implemented can be found here.