On 1st January 2022 new rules changed the way insurers, brokers, and third-party websites can attract new customers.
Traditionally, insurers were able to offer much lower premiums to new customers at the expense of existing customers. Known as a ‘loyalty premium’, insurers were able to offer extremely low premiums to new customers while hiking up the costs for those who stay with them at renewal.
The new guidelines affect policies bought directly from insurance providers, brokers, and comparison websites.
How are insurance quotes changing?
The Financial Conduct Authority is responsible for setting the new rules. It has stated that premiums offered to those renewing a policy cannot be greater than the price they would charge to an equivalent new customer, for the equivalent policy. This means that the initial policy price must be the same for both new customers and loyal customers. Protecting them from huge price increases upon renewal.
While this is a welcome change for those who prefer to stick with the same insurance provider, it does mean that there aren’t as many bargains to be had for those who shop around.
Advice for taking out future policies
In light of the changes, the way you shop for your future home insurance and car insurance policies may have changed. The Association of British Insurers has given the following guidance for customers shopping for new policies.
- Always choose the right policy, not the cheapest. When buying insurance, it is crucial to choose the policy that most closely meets your needs. This may not always be the cheapest option. Choosing policies based on price alone can come back to bite you should you need to claim and you’re not properly covered.
- If you plan on renewing with your current insurer, the ABI suggests that you carefully read and check the renewal terms before you agree – making sure the cover still meets your needs. If it doesn’t, you’ll need to make your insurer aware of any changes before agreeing to another policy.
- Shopping around can still be beneficial with the market expected to remain competitive. Searching for policies with other providers can still yield some great results – just remember to be accurate and honest when going through the quoting process.
- Although the new rules will stop extreme price hikes on renewal, its likely that your policy price will still increase. Policy prices are affected by things like the changing costs of vehicle repairs, whether you have made a claim in the past year, and if you are changing your policy by adding extra drivers.
For advice navigating the changing world of car and home insurance, our experts are here to help. As independent insurance brokers we offer non-biased advice with access to a wide range of insurance providers. We’ll also make sure the quotes you receive accurately match your insurance needs. Give us a call now on 01926 495 113.