Insurers forced to be clearer over premiums
10/07/2014
Insurance companies will soon be expected to provide clearer information on renewal quotes, as the Financial Conduct Authority (FCA) prepares to draw up new rules for the industry.
The new regulations are likely to include measures to force insurance companies to provide extra details when a customer comes to renew their policy.
It’s claimed that customers will now have to be made aware of what their old premiums were in comparison to their new premiums, whilst the rules could even go as far as forcing insurers to make new customers aware of any introductory discounts.
At the moment, customers are rarely made aware of their old premiums when renewing a policy, something that has led to complaints from consumer pressure group, Which?.
The pressure group claimed that insurers are able to take advantage of customers by offering an introductory discount to convince them to switch providers, before increasing their premiums in the second year.
However, the new proposals would mean that customers would be able to compare their old premium with their new quote, before deciding if they should look to alternative insurance providers.
Encouraging competition
The insurance industry appears to have reacted well to the proposals, as they believe that it will promote healthy competition.
Huw Evans, the deputy director general at the Association of British Insurers (ABI) also stated his support for the idea by saying: "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."
However, whilst the industry has supported the idea for home and motor policies, they have requested that products such as pet, foreign travel and commercial insurance are excluded for the time being.
It is now expected that once the new rules have been fully agreed, they will come into force by the end of next year.
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