Car and house insurance faces price probe
The City regulator is to investigate how home and car insurance policies are priced after finding "hidden" discrimination between customers.
The Financial Conduct Authority (FCA) will study the scale of the issue, whom it affects, and possible solutions.
Insurance customers may pay different prices depending on how loyal they are, their age, and whether they are online.
Marital status, home postcode and employment status may also have a hidden effect on price, the FCA said.
Citizens Advice has already warned loyal customers are being "ripped off".
It launched a super-complaint claiming that customers who stick with the same supplier for a variety of household services are losing a total of £4.1bn a year. That amounts to an average of £877 per person.
Failing to shop around, or the inability to do so, costs people hundreds of pounds.
This is known in the industry as "price walking" - where the cost of insurance is increased each year the customer sticks with the same provider, eventually making their policy much more expensive (and profitable for the insurer) than for a new customer.
Part of the response to the Citizens Advice complaint is this review into the general insurance market by the FCA.
The FCA said UK insurers generated £78bn in premiums from customers and that 82% of adults had one or more general insurance products.
In an analysis of the home insurance market, the FCA said there was evidence of significant price competition for new customers with new policies offered at 30% below the cost of providing the policy and firms increased premiums in the second and third years of the policy.
Read on (source and credit)
https://www.bbc.co.uk/news/business-46042087
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