David Miller, Financial Services Partner, KPMG said: “The FCA's proposals today on general insurance pricing practices cut straight to the heart of the issue of fair pricing.
David Miller, Financial Services Partner, KPMG said:
“The FCA's proposals today on general insurance pricing practices cut straight to the heart of the issue of fair pricing. Ensuring that existing motor and home insurance customers can pay no more than new customers at renewal will remove the practice of increasing existing prices relative to new prices over time, therefore penalising longstanding customers for not shopping around.
“Whilst there are potential consumer savings in the long-term, there is a risk of short-term pricing increases for new customers. The unintended consequence of these measures could also have significant impact on the wider insurance ecosystem, as consumers are less incentivised to shop around, impacting insurers’ distribution strategies.
“This is a very significant intervention aimed at improving customer outcomes, with a number of the remedies going beyond the motor and home insurance. This leaves insurers with much to consider regarding some of the fundamentals of how they do business.”
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