10th July 2014
Under new rules being drawn up insurance firms will have to be far more transparent with consumers when they come to renew their motor and home insurance quotes.
The proposed overhaul will mean that when insurance customers are sent a new premium, it must be made completely clear what they have been paying previously. In many cases consumers are not reminded of what they have been paying and may not be aware that their bills are rising.
Industry trade body, the Association of British Insurers (ABI) has written to the City regulator, the Financial Conduct Authority (FCA) to propose the revamp.
The ABI said the proposals would set a new minimum standard of information applying across the market. The initiative proposes:
– Renewal documents for motor and home buildings and contents insurance should include the premium that customers started the year paying, alongside the renewal quote for easy comparison.
– Policy documents for new customers should include a clear explanation that any introductory discounts which may have applied to new customers may not apply when the policy is due for renewal.
Huw Evans, deputy director general of the ABI said: “Insurers want to make renewing your insurance policy easier and clearer to understand by reminding you of last year’s premium and flagging up introductory discounts.
“Most of us have home or car insurance and it is important we have the information we need when it comes to renewal. Our proposal, if adopted by the FCA across the market, would significantly improve transparency for millions of customers. We look forward to discussing it in detail with the FCA.”
Consumer watchdog group Which? launched its own campaign on the matter in February. Dubbed “We Don’t Want to Pay a Premium” it received nearly 30,000 signatures from supporters
Richard Lloyd executive director at the organisation, commenting on today’s development, said: “The Association of British Insurers’s proposed reforms would be a victory for the 30,000 people who signed our campaign calling on insurers to show customers the premium they paid last year. These simple changes could save people money by prompting them to shop around or haggle for a discount, and we urge the Financial Conduct Authority to adopt the proposals.”
Natasha Glasgow, head of insurance at comparison site, MoneySuperMarket believes that greater transparency in the industry is long overdue. She said: “At long last, the insurance industry is waking up to the fact that it has made the process of renewing policies at a competitive price as difficult as possible, with many customers paying way over the odds because they stick with the same insurer year after year.
“We would like to see these measures go further, and tackle the issue of insurers automatically renewing policies for the second year. This practice hinders customer’s abilities to shop around for the best deal.”