Customers renewing their home or motor insurance from 1 January will be charged no more than new customers under rules being implemented by the Financial Conduct Authority in the new year.
The FCA said on Thursday that the new rules are expected to save consumers £4.2bn over the next 10 years. The reforms follow a review during which the FCA found that many insurers were increasing prices for renewing customers year-on-year – a practice known as price walking.
Sheldon Mills, executive director of Consumers and Competition at the FCA, said: “Our interventions will make the insurance market fairer and make it work better. Insurers can no longer penalise consumers who stay with them. You can still shop around and negotiate a better deal, but you won’t have to switch just to avoid being charged a loyalty premium.
“We are keeping a close eye on how insurers respond to our new rules, to ensure that the benefits of a better insurance market are delivered to consumers.”
The reforms also include new rules to give consumers easier methods of cancelling the automatic renewal of their policy, and to require insurance firms demonstrate their products deliver fair value to customers.
