Research from Trustly has found 74% of UK insurance firms plan to widen premiums to all customers following the Financial Conduct Authority’s (FCA) recent pricing review.
The pricing review – which came into practice on 1 January 2022 – will force insurers to improve competition and shield consumers from price discrimination or ‘loyalty penalties’, whereby existing loyal customers end up being charged higher premiums than new ones.
The research found that over three quarters – 77% – of firms surveyed said they were concerned they will lose customers following the implementation of the review. In addition, 76% of companies said this will change how they calculate their quotes for home and motor insurance, while 64% said they felt concerned that this would cause them to lose their competitive edge when looking for new clients.
Up to 32% of respondents said they plan to offer new methods of payment to meet the consumer demand, whole 29% said they will offer instant refunds at the start of a contract for claims. Furthermore, 30% intend to offer vouches to other services like Amazon and 29% plan to offer dedicated contacts for each customer.
Trustly also found that almost one quarter – 24% – are planning to increase their premiums by 61-70%, adding between £260 and £300 to the average UK car insurance. Up to 93% said they now plan to offer the same benefits to current customers as they do to new customers, while 27% will only offer them inf the customer calls to ask for them.
Trustly head of growth, financial services Stuart Barclay said, “With reduced opportunities for cut-price offers for new customers, we’re going to see consumers focus more on the value and service they receive from their insurer. Customers care more than ever before about how quick and easy the claims payout process is – 79% agree that the speed of a claim payment affects their selection of insurer. Insurers need to focus on how they digitise and speed up this process, all whilst providing internal cost benefits. This is why at Trustly, we’re encouraging insurance companies to turbocharge their claims process through open banking”.
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