A biting report from the Financial Conduct Authority (FCA) says car and home insurance markets are not working well for consumers.
The regulator is proposing ‘radical’ reforms designed to boost competition, deliver fair value and increase trust in the sector.
If its proposals are accepted, customers will save an estimated £3.7bn over 10 years.
The main issue highlighted in the FCA’s final report into the way car and home insurance premiums are set is that customers who renew with the same firm are charged more than they would be if they were an equivalent new customer – the so-called ‘loyalty tax’.
Firms offer lower prices to attract new customers, with premiums rising for those who stick with the company at renewal – a practice called ‘price-walking’.
To counter this, the FCA is proposing that, when a customer renews their home or motor insurance policy, they should pay no more