Insurance industry announces new plan
Insurers and brokers have announced a new plan to help tackle excessive premium differences between long-standing and new customers.
The ABI (Association of British Insurers) and BIBA (British Insurance Brokers’ Association) have launched a set of Guiding Principles and Action Points that will address some of the issues in the current market that can lead to excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.
By implementing this initiative, ABI and BIBA members can expect to see an improvement in the outcomes for long-standing customers. The ethos and approach to better outcomes for long-standing customers will be formally incorporated into firms’ procedures for determining the premium at renewal.
The Guiding Principles and Action Points (GPAPs) apply to key personal lines insurance products such as home, motor and travel, but not pet or health insurance. Many pet and private health insurance products provide cover at renewal for medical conditions that arose since the inception of the policy. These would generally not be covered under a new policy, meaning comparisons are not valid.
ABI chairman Andy Briggs said, ‘Insurers do a great job for their customers, providing peace of mind and financial help when they most need it, but the renewal market simply doesn’t work where loyal customers get charged much more than new customers.
‘Given many consumers expect to get cheaper insurance when they shop around, there is no easy solution. These new Guiding Principles and Action Points are a positive initiative by the ABI and BIBA members to demonstrate that the whole industry recognise this is an important issue that needs to be addressed.’