JEFF PRESTRIDGE: We were right about insurance companies… loyalty really does matter
It’s been a tortuous journey, but at long last the City regulator has acted to stop loyal customers being exploited by greedy insurance companies.
Better late than never, so cheers all round and a gentle pat on the back for the Financial Conduct Authority – an organisation not renowned for its decisiveness (a picture of a snail comes to mind whenever I see the letters FCA).
Last Friday, some four years since The Mail on Sunday campaigned quite magnificently to end this exploitation – and in the process won prestigious awards for its investigative work – the Financial Conduct Authority announced what it intends to do.
The FCA has acted to stop loyal customers being exploited by greedy insurance companies – something The Mail on Sunday has long campaigned for
In a nutshell, from the start of next year, insurers will no longer be able to price discriminate against existing customers who have motor or home insurance cover with them.
It means that when customers are invited to renew their annual policies, they will be offered a new premium no more expensive than that available to someone coming to the insurer as a new customer.
The new rules should stop exploitation of customers who auto-renew their policies every year under the false impression that their insurer will always look after their best financial interests. Sadly, loyalty and insurance companies have never been anything other than uncomfortable bed partners.
The rules should also bring to an end the steps (some time consuming, some borderline ridiculous) that many savvy customers have had to take to get a better insurance deal at renewal.
These include shopping around every year, usually via a comparison website, for a new policy – all very time consuming.
More pertinently, they should halt the crazy practice of customers having to threaten their existing insurer with leaving before being given a cheaper deal than first offered.
Or even more crazily, opting not to renew, but then coming back as a new customer on a premium they would never have got as an existing customer.
The regulator says its measures – that also include easier ways for customers to cancel a policy ahead of automatic renewal – will save consumers £4.2billion in premiums over the next ten years.
That remains to be seen, but the FCA has for once come up trumps (the same cannot be said about its tardy handling of the Woodford investment scandal).
It’s just a shame that it has taken regulatory action – and campaigning from newspapers like ours – to right an insurance wrong. Treating customers fairly should be part of every insurer’s DNA.
All that is required now is for the regulator to ensure its new rules are adhered to in the new year – and for it to swiftly punish any miscreants with meaty fines.