The Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) have announced moves to address the excessive differences in premiums between long-term and new insurance customers.
The two bodies have launched a new set of Guiding Principles and Action Points, which it is hoped will go some way towards tackling issues in the UK insurance market which often see a gulf between the premiums offered to new customers and overly expensive renewal premiums that are seen to penalise long-standing customers. These long-term customers should, according to the ABI and BIBA, see a welcome reduction in premium levels as the initiative takes effect.
“Insurers do a great job for their customers, providing peace of mind and financial help when they most need it,” said Andy Briggs, Chairman of the ABI, “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.”
The principles baked into the new initiative include: that the ABI and BIBA members will take action so that when customers shop around for renewal, this does not lead to excessive pricing differences; that the commitment to better outcomes for long-standing customers will be given high-level priority; that members will need to make it abundantly clear in either written, verbal or online communication that new customer premiums only apply for the first year, with subsequent renewal premiums potentially being here; and that the two bodies will publish a report in two years’ time – no more – demonstrating how members have sought to tackle the problem.