We are consulting on rules and guidance to implement a package of remedies to address the harms identified in the general insurance pricing practices market study.
Why we are consulting
Our market study found extensive evidence that some firms gradually increase the price to customers who renew with them year on year. This is called price walking.
Firms use complex pricing techniques to identify consumers who are more likely to renew with them. Firms then increase prices to these customers at renewal each year, resulting in some consumers paying very high prices. Many of these consumers are unaware of this, mistakenly believing that their provider is offering them a competitive price at renewal. In addition, some firms use practices that can discourage consumers from shopping around, including by making it more difficult to cancel automatic renewal.
We have also identified wider concerns about product governance and fair value more generally in the insurance market.
We propose a package of remedies to address the identified issues.
We have carefully considered the potential impact of our remedies on a market that continues to be affected by the coronavirus pandemic. We will continue to monitor the market during the consultation period and will consider the ongoing impacts of the pandemic before making any final rules and issuing a Policy Statement.
Who this applies to
This consultation is relevant to firms in the insurance market.
While our focus is primarily on the home and motor insurance markets, we propose to apply some of our remedies to all types of general insurance and pure protection insurance. Some proposals also apply to finance products sold alongside insurance.
Respond to this consultation
We are asking for comments by 25 January 2021.
You can send them to us using the online response form or you can email your responses to [email protected].
We want to know what you think of our proposals. We will consider all feedback and intend to publish a Policy Statement in Q2 2021 with our response to the feedback and our final rules.