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Insurers told to give clearer quotes

Insurers told to give clearer quotes

Category: Insurance

Updated: 10/07/2014
First Published: 10/07/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Do you find it difficult trying to wade through pages and pages of small print when you're arranging your insurance policy? Probably, yes – and in some cases it can be difficult working out what you actually have to pay. That's why the Association of British Insures (ABI) has stepped in, and it'll hopefully make the process a bit easier.

The ABI has written to the Financial Conduct Authority (FCA) to propose an initiative which would improve clarity for customers who are renewing – or taking out – home or car insurance policies. It's suggesting that a new minimum standard of information should apply across the market so all customers will automatically get the necessary information, with key proposals being that:

  • Renewal documents for car and home insurance policies (buildings and contents) should include the premium that the customer started the year paying alongside the renewal quote for easy comparison.
  • Policy documents for new customers should include a clear explanation that any introductory discounts which may be applied initially might not be when the policy is due for renewal.

Essentially, it means consumers will know exactly where they stand. They'll be specifically told about the price they're paying now as well as what they might have to pay in the future, and the ability to easily compare premiums will make it far simpler for customers to decide if they're getting the right deal at renewal.

Happily, it seems insurers themselves want to offer this kind of clarity. Huw Evans, of the ABI, said: "Insurers want to make renewing your insurance policy easier and clearer to understand by reminding you of last year's premium and flagging up introductory discounts.

"Most of us have home or car insurance and it is important we have the information we need when it comes to renewal. Our proposal, if adopted by the FCA across the market, would significantly improve transparency for millions of customers. We look forward to discussing it in detail with the FCA."

It's a big change, as currently most customers aren't reminded what they paid previously when it's time to renew their quote – they're informed of the new premium but that's it, and as a result a lot of customers might not even be aware that their premiums have gone up.

The new measures, if approved, would mean that this is a thing of the past. Policyholders will instantly be able to see whether their premiums have gone up (and by how much) and can make accurate comparisons, with it all being designed to make documentation more transparent so it's easier for all of us to see if we should stay put – or look elsewhere.

The ABI's suggestions complement the work already started by the FCA in the industry, with the regulator drawing up new rules to benefit consumers. When finalised they could come into force by the end of next year, but in the meantime you still need to make sure you know where you stand.

That's why it's so important to do the necessary research. Make sure you dig out your policy so you can accurately compare your old quote with the new one, and don't forget to shop around. A lot can change in a year and you could well find a better deal elsewhere, so before you sign up to another 12 months make sure you're getting the best price possible.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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