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Fairer Insurance Renewals as Rates Set to Soar

07 April 2017 | Updated 01 January 1970
 

Changes to give consumers a better understanding of their renewal premium and options when their retail insurance policies, such as motor and home insurance, come up for renewal cm in to force on April 1.

The new rules, which the Association of British Insurers first called for in 2014, are now coming into force through requirements from the Financial Conduct Authority. They will apply to anyone selling retail general insurance products, including insurers, brokers, banks and retailers. They will require firms in renewal communications to:

  • Show the current premium (including any mid-term changes) alongside the renewal premium.
  • Provide information to encourage customers to check their cover and consider shopping around for the best deal.
  • Identify those customers who have renewed with them on four consecutive occasions and provide them with additional messaging on shopping around.

The ABI stresses that while price will be a factor, it is more important for consumers to check that the policy cover meets their needs. This is particularly important for policies such as health and pet insurance, where a claim made during the year, could mean that the same cover may not be available when shopping around.

James Bridge, ABI’s Assistant Director, Head of Conduct Regulation, said: “Many customers already shop around for the best insurance deals at renewal. These changes should help more people see if their renewal quote has changed and to decide if they want to shop around. The ABI has long called for changes to be made by the regulator so that all customers, regardless of from whom they buy their insurance, benefit.

“Industry initiatives, such as the Code for Vulnerable Customers at Renewal and ABI’s publishing of claims acceptance rates, are improving transparency. They are helping give customers greater confidence in getting the right policy for their needs at a competitive price.”

 

ABI responds to 'crazy' decision to change the personal injury discount rate

Meanwhile, Huw Evans, Director General of the ABI has described the February announcement by the government of the change to the personal injury discount rate as crazy. He said: “Cutting the discount rate to -0.75% from 2.5% is a crazy decision. Claims costs will soar, making it inevitable that there will be an increase in motor and liability premiums for millions of drivers and businesses across the UK. We estimate that up to 36 million individual and business motor insurance policies could be affected in order to over-compensate a few thousand claimants a year.

“To make such a significant change to the rate using a broken formula is reckless in the extreme and shows an utter disregard for the impact this will have on consumers, businesses and the wider operation of the insurance market.

“We have repeatedly warned the Government that this could lead to very significant price rises, with younger drivers in particular likely to find it much harder to get affordable insurance. It is also a massive own goal that lands the NHS with a likely £1 billion hike in compensation bills when it needs it the least."

The decision will mean that although those who make whiplash claims will see the amount they can claim capped, those in serious accidents will be able to claim much more.

Picture: It's time to check insurance renewal documents give consumers fairer information

 

Article written by Robin Snow | Published 07 April 2017

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