22 September 2020
Commenting on the final report of the FCA’s market study into the pricing of home and motor insurance, Santi Restrepo, Financial Services Director at BDO said:
“Today’s report should not come as a huge surprise to insurance companies who have had some time to address the fairness and pricing issues identified by the FCA. Smart insurers have already begun aligning new business and existing business prices, putting the customer at the forefront of every pricing decision. However, we have seen different approaches adopted across the market including the capping of renewal rates, auto renewal “opt-in” rather than “opt-out” models and better identification of vulnerable consumers.
“Third party providers of rating software will have an important role to play and indeed, they have been building software that includes components that look at fairness and pricing principles. Insurers will be able to define what that means to them and embed this bespoke approach in their customer pricing.
“While the FCA’s actions will result in customers being treated more fairly, as renewal books will no longer subsidise new business, insurers with a large existing book of business may see the knock-on effect on their share price. We may also see losers as well as winners when it comes to the premiums consumers pay.”
Notes to the editors
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