LONDON (Reuters) – Britain’s markets watchdog is launching a study into how insurers charge for home and motor coverage amid concerns that costs can be higher for long-standing customers than new ones.
The Financial Conduct Authority (FCA) said on Friday the terms of reference for the market study would be published in a few weeks.
“The general insurance market study we have announced today will help us examine the issues we have already identified in the market in more detail,” FCA Chief Executive Andrew Bailey said, referring to concerns about higher prices for existing customers who renew their policies each year.
The watchdog has powers to change how markets operate in order to increase competition and ensure customers are treated fairly. Past market studies have also led to enforcement action.
The Association of British Insurers, an industry body, said that earlier this year it became the first sector to take voluntary action to ensure that long-standing customers don’t lose out.
“This includes commitments from firms to review premiums charged to customers who have been with them for five years, and the industry publishing a report on progress within two years,” said Huw Evans, director general of the ABI.
“In a competitive free market, where 3 out of 4 people shop around, there is no easy fix available and these measures will take time to bed in.”
(Reporting by Huw Jones; Editing by Mark Potter and Elaine Hardcastle)