According to financial experts, there is no guarantee that these new rules will make the market more fair and competitive. They are designed to ensure insurers don’t penalize loyal customers for paying higher premiums than they do new policyholders.
The rules, that kicked in on New Year’s Day, mean that home and motor cover insurers will no longer be able to offer below-cost prices to new customers – while hitting loyal customers with higher premiums and year-on-year rises, confident they will not switch to a rival.
The Mail on Sunday first revealed such practices and won a variety of awards for its groundbreaking work.
Fail: The new rules will mean that home and motor insurance insurers won’t be able offer lower-cost pricing to customers.
Gareth Shaw, head of money at consumer group Which?, says the rule changes will count for nothing unless the regulator closely monitors insurers to ensure they do not find ‘new ways’ to exploit loyal customers.
‘It should be prepared to take action where necessary,’ he says.
The regulator – the Financial Conduct Authority – insists it will be keeping a ‘close eye’ on insurers.
Fairer Finance Campaigner James Daley worries that new regulations could make the market less competitive as more people might not feel it is worthwhile shopping for lower-cost insurance.
He says: ‘With a more passive customer base, insurers could look to increase their margins in other ways – for example, by whittling away at the quality of their products.’