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Regulator slowly, finally makes moves to resolve major insurance market issues

FCA tackles the insurance penalty – at last!

The Financial Conduct Authority (FCA) has announced today that it will reform home and motor insurance, focussing particularly on the current “loyalty penalty” that punishes existing loyal clients’ premiums and favours new clients.

The FCA found in 2018 that some 6 million policyholders were paying high or very high margins over and above an average premium. Had they have paid the average for their risk, they would have saved £1.2 billion!

The FCA has published a 31-page report on the insurance market and finally (two years later!) announced a consultation on the following:

  • Product governance rules requiring firms to consider how they offer fair value to all insurance customers over the longer term.
  • Requirements on firms to report certain data sets to the FCA so that it can check the rules are being followed.
  • Making it simpler to stop automatic renewal across all general insurance products.

“The FCA is proposing that when a customer renews their home or motor insurance policy, they pay no more than they would if they were new to their provider through the same sales channel.”, says the regulator’s announcement today.

If the proposal goes ahead it is estimated that £3.7 billion would be saved by insurance customers over 10 years. Methinks the insurance companies won’t like these proposals!

Loyalty Super Complaint

The FCA’s action originates in September 2018, when the Citizen’s Advice Bureau launched a  “Super Complaint” calling on the regulator to look into how consumers are being penalised for loyalty in 5 key sectors. It requested an outline from the CMA on what action would be taken to resolve the problems.

CAB launches super-complaint into penalising loyal customers

FCA Consultation on insurance prices

The FCA’s consultation is open until 21 January 2021, to be followed by analysis of feedback and a Policy Statement, with new rules due later that year. We’ve all known that these practices have been going on for years and the Super Complaint was made two years ago. It beggars belief that it will be three years from this complaint before something is done.

FCA dragging its feet

In a statement made in September 2018 the FCA said

“In the FCA’s 2018/2019 Business Plan we announced that we were looking at the pricing practices of general insurance firms. As part of that work we will launch a market study looking at how general insurance firms charge their customers for home and motor insurance. The terms of reference for this market study will be published in a few weeks’ time.”

So, why has it taken so long?

In the meantime here are the measures you can take to ensure that you are not losing your share of the 1.2 billion that insurance companies are overcharging their loyal customers!

grid of 4 cars


See How to save money on your car insurance





See How to save money on insurance and beat the tactics used to make you renew a story of how to get round the company wanting to make you phone to cancel a renewal…

How to save money on insurance and beat the tactics used to make you renew

Financial issues

How to save money on insurance and beat the tactics used to make you renew

Loyalty deserves a reward from insurance companies

I recently received the renewal for my house insurance. I was a new customer last year but this year the renewal arrived with the new customer discount removed. The insurance company took away a benefit and gave me nothing for my loyalty to them.

I could get the insurance much cheaper with another company, obviously. £100 cheaper in fact. All you need to know about comparison websites

Annoying, isn’t it?  And I bet that, even if you work in the world of insurance, this annoys you too!

Lloyds Bank, like most insurers, don’t want you to email, they want you to phone. Usual story. They do this so that you have to phone to cancel the automatic renewal and waste more of your time discussing it while they go through your details.

I refuse to do this! If the company can do everything else online then it damn well give me a new quote online too!

piles of coins

Write don’t phone to get the best results

I refuse to discuss it on the phone and waste my time, so I emailed the CEO’s office (using and made them reply to me. “Either beat this quote or don’t automatically renew and I will keep this as my evidence of informing you.” I did put it slightly more politely than that!

What did I get? A phone call. What part of “I will not discuss this on the phone” did they not understand???? (I had ignored the call).

“You need to phone this number to get a loyalty discount” without giving me the offer either!

No I do not. I do NOT need to phone that number!

Eventually the message got through and I was told that they could discount the quote previously offered by £140! And I could just let them know by email.

Why you should write not ‘phone to complain effectively

No reward for loyalty

Why? Why is there no discount for loyalty? Why do insurance companies make it so difficult for people to contact them? Although I think we all know the answer to that!

Insurance companies: You take a risk and reward our loyalty

When will a company do the right thing and take the lead in rewarding the loyalty of its customers? None of them appears to want to take the risk. Yet the whole insurance system is based on risk. Invest enough for three years on getting the message out that you are the market leader, the first to do something different and let the others follow. But by then you will already have cornered the market. No one becomes the market leader by following the market leader.

How to save money on insurance and beat the tactics used to make you renew