Pricing reforms reshape personal insurance market
Sweeping pricing reforms launched in January are reshaping the personal insurance market, with almost 800,000 fewer people expected to switch providers when they renew their motor cover this year, according to an analysis of the latest data.
The overhaul to UK car and home insurance regulation was designed to protect loyal customers — the majority of policyholders historically did not switch every year — by stamping out so-called price walking. This practice involved luring in new customers by discounting and then raising their renewal premiums each year.
Analysts at data provider Consumer Intelligence put the proportion of people switching their car insurance between April and June at 36.9 per cent of the market, down 2.8 percentage points when compared with the same period in 2019, the last full year before the coronavirus pandemic. The proportion of people switching home insurance fell 2.4 percentage points to 34.7 per cent.
James Dalton, the ABI’s director for general insurance, said its members could “sympathise with households who [were] facing difficult times”, but added that rising cost pressures were “becoming increasingly challenging to absorb”.
Further price rises could yet reverse the fall in people shopping around. “If inflation starts moving through the market, you might see an increase in switching,” Direct Line’s James said, adding: “It’s still early days.”
This story originally appeared on: Financial Times - Author:Ian Smith
