ABI proposals on home and motor insurance renewal pricing
The ABI has recently announced that it has written to the FCA setting out its proposals to improve transparency and clarity for customers when renewing their motor and home insurance policies.
These proposals follow up on the FCA's current work in this area and can be seen as proactive steps by the insurance industry as a whole to underline its commitment to ensuring that appropriate pricing information is given to customers prior to policy renewal in order to enable customers to make an informed decision about the proposed arrangements.
In connection with insurers' obligations under ICOBS 6 to provide all information about a policy (including pricing) in good time which applies both prior to customers purchasing a policy and at policy renewal, the proposals will require insurers to state in renewal documents:
- the premium that the customer paid at the start of the year alongside the renewal quote for easy comparison; and
- any introductory discounts which may have applied to new customers but will not apply when the policy is renewed.
In our view, if implemented, these proposals will not only benefit customers but will go some way to addressing the FCA's concerns as highlighted in Charley Taggart's summary of the FCA's Business Plan 2014/15, that insurers may be taking advantage of consumer inertia on large renewal books.
We are tracking the developments in this area and will provide you with any relevant update on the implementation of the ABI's proposals in due course.