The UK’s personal insurance market will undergo a big shake-up next month, as a sweeping overhaul of pricing rules looks set to disrupt a sector serving millions of customers.
A new regime imposed by the Financial Conduct Authority will stamp out a practice known as price walking, where insurers profit by luring in new customers with low prices and ratcheting up renewal premiums.
Instead, providers will have to offer an existing policyholder at renewal the same price they would have received as a new customer. The regulator has estimated this will save customers £4bn over a decade.
The changes affect the two core areas of general insurance: motor, which according to industry data accounts for 27m policies across the UK, and home, with 18m.
“It’s a huge moment,” said Matthew Upton, director of policy at Citizens Advice, which triggered the changes with a formal complaint three years ago. It highlighted that people were paying almost £900 each in “loyalty penalties” across five markets including insurance and broadband.
Upton said that the existing…
