FCA has Government backing to investigate excessively high renewal premiums
Everyone knows that the best way to get a good renewal price on your insurance is to shop around. Besides the extra cashback you could earn by switching, most insurance companies will offer better deals to new victims customers than to those they have already snagged.
However, a BBC Moneybox programme back in March highlighted that the price differential can be as high as eight times the difference, with some companies refusing to offer existing customers the same deal even when challenged.
However, on Friday, the Chairman of the Commons Treasury Committee Andrew Tyrie confirmed the FCA is investigating the practice by insurers in the UK with a view to protecting the vulnerable.
While you might surmise that the idiots people who don’t bother to shop around might deserve any financial penalties they suffer, Mr Tyrie is more concerned about those who can’t, rather than those who won’t. In a nearlier open letter to the chair of the Association of British Insurers (ABI), he wrote "such practices appear to penalise long-term loyalty and are to the detriment of those less able to access price comparison resources, particularly the elderly."
The ABI responded by saying "extreme differences" between automatic renewal prices and those charged to new customers were unusual, although “varied pricing aimed at attracting new business was to be expected.”
In a statement released on Friday, Mr Tyrie said: "The previous regulatory regime failed to protect consumers. It must do better this time around…The FCA...can do a lot to help consumers, especially vulnerable consumers,” adding "If people are given a more meaningful choice, they are less likely to be ripped off.”
He does know he’s dealing with insurance companies, right?