Insurers face probe into hitting renewing customers with price hikes
Dozens of insurers face probe by finance watchdog who has asked them to prove they are not breaking the rules by hitting existing customers with hefty price hikes when they renew policies
- Up to 100 insurers are being probed by the watchdog over insurance renewals
- New rules were supposed to ban charging existing customers more than new ones
- Hundreds of Mail on Sunday readers say they had big price rises on renewal
- FCA launched promised to save customers £4.2 billion over the next ten years
Up to 100 insurers are being probed by the City watchdog over concerns they are hitting customers with hefty price hikes when they renew home or car cover policies, The Mail on Sunday can reveal.
New rules introduced in January by the Financial Conduct Authority (FCA) were supposed to ban insurers from charging existing customers more than new ones.
But this newspaper has heard from hundreds of readers who say they have been hit by big price rises on renewal – and some found they could get a cheaper rate if they applied to their insurer as a new customer.
Hundreds of Mail on Sunday readers say they had big price rises on renewal of their insurance
The MoS understands the FCA has now asked between 60 and 100 companies – comprising both brokers and insurers – to prove they are not breaking the rules.
They have been targeted by the regulator after complaints were made by MPs on behalf of constituents, and by consumer groups and the MoS.
This follows a six-month investigation by this newspaper into whether the rules, designed to ensure all customers are treated fairly, are being adhered to. All insurers vigorously deny they are breaking the rules.
The FCA said: ‘We are in the process of testing data from insurers of various sizes to make sure they are meeting their obligations to get rid of the discrimination against loyal customers’
When the FCA launched its crackdown, it promised to save long-standing insurance customers £4.2 billion over the next ten years by eradicating the ‘loyalty premium’ – or ‘price walking’ as it is also called. This is the practice of offering a cheap introductory rate and then hiking the price each year to claw in more profit from loyal customers.
The FCA said: ‘We are in the process of testing data from insurers of various sizes to make sure they are meeting their obligations to get rid of the discrimination against loyal customers.
‘We are thankful for the market intelligence provided to us by various parties, including The Mail on Sunday, along with many customers, which has greatly assisted us.’
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