Rodney Bonnard, UK Head of Insurance at EY, comments: “Today’s FCA final report is a positive move forward for consumers – it represents the most radical intervention in motor and home insurance by the FCA since its inception and arguably goes further than the industry was expecting. It signals a fundamental change to current market dynamics and practices, with the biggest change being the end of ‘price walking’, as all firms must now offer existing customers the same price for renewal as they would offer a new customer. Some firms had already taken steps to do this but the announcement today will ensure parity across the industry.
“While this should mean that on average premiums will be lower, it’s likely that older customers, who were less prone to switching, will enjoy the larger savings while younger customers, who tended to shop around more, may see their premiums rise.
“For many general insurance firms this is likely to mean an overhaul of their business models and a reset to their pricing to reflect longer term relationships. Fundamentally, it will provide the opportunity to build brand loyalty and have better engagement with customers.”