FCA: insurance renewals must show last year's premium

The proposals aim to address concerns that some consumers pay higher prices if they stay with the same insurer, particularly for a long period of time. The FCA has found evidence of low levels of consumer engagement, switching, and a lack of competition when some types of insurance policies are renewed.

Christopher Woolard, director of strategy and competition at the FCA, said:

“We hope the proposals encourage more people to shop around for the best product for them. It is important that insurers give their customers the information they need to do this and ensure they’re treating their customers fairly.”

In 2014, the FCA launched a large scale trial with over 300,000 consumers across the UK to test reactions to different types of information provided at renewal and whether this prompted people to switch. The inclusion of last year’s premium on renewal notices had the greatest impact, prompting between 11% and 18% of people to either switch provider or negotiate a lower premium when prices sharply increase.

In addition to requiring firms to disclose last year’s premium on renewal notices, the FCA is also asking firms to identify and specifically prompt those consumers who have renewed the same product four times or more to encourage them to engage.

The new proposals will also require firms to maintain records of past premiums.

ABI Director General, Huw Evans, said:

“Publishing last year's price alongside the renewal quote up front is a good idea which insurers themselves proposed to the FCA last year. This will help customers and encourage them to engage with the policy they choose and what they get for their money. It will take time to implement such a big change across the whole insurance industry and we will work closely with the FCA to ensure this welcome reform is delivered on a realistic timescale.”