Consumers have been issued with new guidance ahead of changes to insurance pricing rules that come into force next month. The Association of British Insurers (ABI) says it has tried to inform customers of how the changes, which are designed to make pricing fairer, will impact their policies.
From January 1, 2022, the insurance regulations will change to prevent customers charging existing customers more than they would charge equivalent new customers. The regulations brought in by the Financial Conduct Authority (FCA) affect both home and motor insurance policies, and are designed to prevent companies penalising customers who choose to stick with their insurer.
The FCA has admitted the new rules may mean some customers will end up paying more for insurance, but the scheme is designed to make the market fairer. And the ABI says it believes “the home and motor insurance markets should remain competitive”.
Nevertheless, the ABI has announced some new guidance for consumers who may be affected by the changes, urging them not to take the new rules as a reason to stop shopping around. According to the ABI, it’s critical that drivers stay on the lookout for new policies that remain competitive in terms of price and value.
And the organisation has warned motorists not to opt for the cheapest policy possible, reminding consumers of the need to choose a policy that suits their needs, rather than simply choosing the least expensive. By the same token, the ABI is also telling drivers to check their renewal documents to ensure their policy still meets their requirements.
James Dalton, the ABI’s director of general insurance policy, said the ABI was pleased the FCA had introduced reforms, and promised insurers would work to make the transition to the new rules as easy as possible.
“We support these reforms, and are pleased that the FCA has acted to bring them in across the home and motor insurance markets,” he said. “While the FCA recognises that these changes could lead to price rises for some who shop around regularly, all customers should get fairer outcomes in the UK’s competitive home and motor insurance markets. These are very significant changes and insurers will work with the FCA to ensure as smooth a transition as possible for their customers.”