Morning Live: Expert shares tips on car insurance
When you subscribe we will use the information you provide to send you these newsletters. Sometimes they’ll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.
James Blackham, CEO of ByMiles said the current car insurance system is “outdated” and has backed widespread changes by the Financial Conduct Authority. Mr Blackham has called for drivers to receive a “personalised offering” and to not punish drivers for travelling less.
He told Express.co.uk: “The reality for many is that the problem starts well before the customer looks to renew their policy – [it’s] when they purchase a policy which doesn’t properly take account of their circumstances.
“The prevalent pricing model is outdated and actively penalises drivers for driving less. This is unfair, if you drive less, you should pay less.
“Everybody’s behaviour is different, and in this era of data-driven hyper-personalisation, all consumers should be getting a more personalised offering.
“The loyalty penalty takes advantage of time-poor, trusting and often vulnerable consumers.”
His comments came just after the Financial Conduct Authority introduced new measures to protect drivers from loyalty penalties.
The changes have stopped firms increasing costs for existing customers every year in a policy known as price walking.
Insurers will now be required to offer existing customers a price that is no higher than they would pay as a new customer.
The FCA has estimated the change will save consumers around £4.2billion over 10 years.
DON’T MISS
Car insurance scams can have ‘physical and mental’ impact on drivers [COMMENT]
Martin Lewis says 23 days is the ‘perfect time’ to renew car insurance [INSIGHT]
Drivers can secure pay per mile car insurance in ‘fairer deal’ [ANALYSIS]
The agency has also introduced new rules to make it easier for consumers to cancel their automatic renewal policy.
The FCA will also require insurance firms to consider how they offer value to customers.
Companies will now also need to report data to the FCA so it can supervise the market more easily.
Mr Blackgam said the updates were a “positive move” and would help restore trust to the insurance industry.
He told Express.co.uk: “The FCA has absolutely done the right thing in ending the systematic overcharging of loyal customers at renewal.
“We welcome this very positive move by the regulator but the battle is far from won.
He added: “These measures, when in place, will finally offer consumers protection and they will help restore trust, transparency, and fairness to the insurance industry.”
The new pricing and auto-renewal rules are set to come into effect from 1 January 2022.
The FCA has promised to review the new changes throughout 2022 and has committed to a full evaluation by 2024.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA said the changes would make the “insurance market work better” for drivers.
He said: “These measures will put an end to the very high prices paid by many loyal customers.
“Consumers can still benefit from shopping around or negotiating with their current provider – but won’t be charged more at renewal just for being an existing customer.
‘We are making the insurance market work better for millions of people.
“We will be watching closely to see how the market develops in the future and to ensure firms continue to deliver fairer value to consumers.”
Source: Read Full Article