3. Why do insurers rarely allow existing policyholders to access new and, usually, better products?
Into the top three now - and it was a feature with Martin O’Connell, founder of The Protection Revolution, who examined why insurers rarely allow existing policyholders to move onto newer and typically more comprehensive protection products, and why this became a key talking point during the year. He linked the issue to the FCA’s ongoing protection market study, which was examining unnecessary policy replacement and whether consumers were consistently achieving good outcomes. While annual reviews remained essential, O’Connell questioned whether changes in need always justified starting a new policy from scratch.
The article explained how level premium pricing models contributed to the problem. Under these models, customers effectively overpay for risk in the early years of a policy and recoup that cost later on as the likelihood of claim increases. When a policy is replaced, that balance resets, meaning customers once again pay more than the underlying cost of risk for many years. O’Connell argued this was difficult to reconcile with good consumer outcomes, particularly when age costed pricing would more accurately reflect risk over time.
