Renewing your insurance policies is possibly one of the smartest investments you can make. When you are protected from accidents such as fire, theft and damage, customers tend to feel more at peace and assured that their possessions can be replaced if the worst occurs. Customers are encouraged to shop around to get the best price, but some customers stick with the same provider. However, is it always a good idea to renew with the same insurer?
The issue of ‘price walking’
In the beginning of 2022, The Financial Conduct Authority (FCA) introduced a new rule that will get rid of ‘price walking’. This is when insurance companies and/or brokers increase their prices yearly at each renewal. This has resulted in situations whereby existing customers could be paying more than new customers for sticking with the same insurer. Identifying this as a serious issue in the market, the regulatory body implemented a new rule to eliminate price walking. The FCA has described this new rule as protection for home and motor insurance customers from loyalty penalties.
The current market climate
These measures were implemented after a 2020 market study. The FCA found that home and motor insurance customers lose out when they renew with their current providers. This has meant that insurance holders have had to shop around instead of being rewarded for their loyalty.
This problem has affected the market as insurance firms almost always offer unsustainably low prices to attract new customers. According to the FCA, insurance providers use “sophisticated processes to target the best deals at customers who they think will not switch in the future and will therefore pay more.”
The new FCA rule
With the new rule in place, price walking will be eliminated and customers can be assured that their loyalty will be rewarded. The FCA also predicts that the new rule could save consumers over £4.2bn in the next decade.
If you are looking for Unoccupied, Thatch or Landlord’s insurance, Alternative Insurance Brokers can help. We promise fair prices and always reward existing customers for their loyalty. We always aim to get to know your situation inside and out so we can provide the best policy that fit your specific needs. After all, our motto is to bring the personal touch back to insurance.
For more information, visit this page or call us on 0161 388 2520.