The ABI (Association of British Insurers) and BIBA (British Insurance Brokers’ Association) launched a set of Guiding Principles and Action Points, which aim to address pricing structures which they say can lead to “excessive” differences between new customer premiums and subsequent renewal premiums.
The current system was seen as “unfairly” penalising long-standing customers.
ABI and BIBA say members can expect to see an improvement in the outcomes for these customers.
The ethos and approach to better outcomes for them will be formally incorporated into firms’ procedures for determining the premium at renewal.
The Guiding Principles and Action Points apply to key personal lines insurance products such as home, motor and travel, but not pet or health insurance.
Many pet and private health insurance products provide cover at renewal for medical conditions that arose since the inception of the policy. These would generally not be covered under a new policy, meaning comparisons are not valid.
Key commitments included:
• ABI and BIBA members do not support excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.
• ABI and BIBA members will take action so that customers’ tendency to shop around at renewal is not used to lead to excessive pricing differences that unfairly penalise long-standing customers.
• The ethos and approach to better outcomes for long-standing customers will be given board or senior management level priority and formally incorporated into firms’ procedures for determining the premium at renewal.
ABI chairman Andy Briggs said: “Insurers do a great job for their customers, providing peace of mind and financial help when they most need it, but the renewal market simply doesn’t work where loyal customers get charged much more than new customers.
“Given many consumers expect to get cheaper insurance when they shop around, there is no easy solution.
“These new Guiding Principles and Action Points are a positive initiative by the ABI and BIBA members to demonstrate that the whole industry recognise this is an important issue that needs to be addressed.”
Lord Hunt of Wirral, chairman of BIBA, said: “It is part of the DNA of insurance brokers to put the best interests of the client first.
“That is why I am so delighted that insurers and brokers have come together for the benefit of our established and loyal customers, setting out a positive path forward on renewal pricing.
“I would encourage everyone within the wider market to join with us in adopting these guiding principles and action points.”