It’s been a big week for car insurance, as the FCA confirmed that price-walking will be banned from January 2022. We take a quick look at what this all means.
THE FCA RULING IN A NUTSHELL
For years consumers have complained that loyalty is not being rewarded and the FCA has been listening. It is now going to insist that brokers and insurers will have to offer cheaper cover, assuming there is no change in circumstances of course. From January next year there will also be new rules on automatic renewals, which will be all about making it easier for policyholders to cancel the auto-renewal process in its tracks.
More details on the FCA site here btw.
The ABI commented:
“It is vital that the new rules are applied across the whole insurance market, including price comparison websites and insurance brokers, with a uniform level of supervision and monitoring by the FCA, to ensure good customer outcomes. As the FCA has said previously, insurers do not make excessive profits and, as they now point out, it is likely that firms will no longer be able to offer unsustainably low-priced deals to some customers.
“It will remain important to maintain incentives for customers to shop around, while ensuring competitive deals for those who stay with their insurer.”
An Actuary adds…
John Taylor, Immediate Past President at the Institute and Faculty of Actuaries, said:
“It is vitally important that the home and motor insurance markets work well and deliver fair value to consumers. Mitigating harm to those currently penalised by price walking should lead to fairer premiums for loyal customers. The new FCA rules should also result in less switching or ‘churn’ and lower frictional costs which could benefit consumers.
“The point regarding admin costs is worth noting because each time someone cancels or switches that does add costs for brokers and insurers alike. Multiply that by a few million transactions and you begin to see how much cash the insurance industry could save.”
DATA IS IN THE DRIVING SEAT NOW BRITAIN
But as Rylan notes, there is someone new in the driving seat now and it isn’t Cinch. In fact, shared driver data is far more likely to transform the motor insurance sector than anything the FCA rules on.
Why? Look at the success of PAYG insurance brands during lockdown as people realised they were paying £700 a year to cover a parked car. Go beyond that and factor in the data from ADAS systems in modern cars that track lane changes, speed, braking force, cornering, typical routes taken during rush hour etc. That will lead to personalised cover, based on behaviour not postcodes or job titles. That also opens the door to innovators who want to build new online, app-based motor products that are as easy to switch on or off as a kitchen tap.
When you’re building that future, you know where to come for some interesting driver rewards and add-on services right? Yep, Stubben Edge reckons the true loyalty bonus is a better product, built to protect your lifestyle, not necessarily a cheaper one. Value matters.
Also this week:
CLAIMS LOOPHOLE SPOTTED BY BAE SYSTEMS
One little detail really jumped out of the page when IE mag read the BAE Systems take on the new Ministry of Justice portal here.
If you’re interested in creating loyalty or reward programmes for your clients, Stubben Edge can help through our new Distributor platform. Contact us for more information on how we can help you Start, Run and Grow your business: firstname.lastname@example.org