What the new FCA rules around price-walking mean for you
The Financial Conduct Authority has revealed that loyalty will no longer be met with increasing prices for insurance year on year.
Ever scored an ultra-low-cost policy on a comparison website, forgotten about it, only to see the price jump up the following year after your renewal date has crept by?
Aside from the hyper-alert and super organised amongst us, we’ve all been there. In fact, the BBC reports that there are 10 million home and motor insurance policies that we as a nation are holding onto for five years plus. And while loyalty is something that should ordinarily be rewarded, this hasn’t been the case for a large proportion of the insurance industry, with many providers forced to lower their prices to win new customers, only to level them out year on year, renewal after renewal. Suddenly that great price is costing you more than anticipated because you’ve not shopped around each year.
The FCA, which is in charge of regulating insurance, is now clamping down on this trend, in a bid to potentially save loyal customers around £4.2bn over 10 years. Not only this, but the regulator also intends to make it easier for people to cancel automatic renewals, and will require insurance providers to think about how they offer fair value to their customers.
How this affects you
Firstly, if you insure with Arma Karma, it doesn’t. Our prices start from £3.99 whether you’re with us for one year or ten years.
The only change outside of your circumstances (making a claim, adding new items etc) would be insurance premium tax (IPT), which is across the board. If you have taken out a subscription with us, you will have seen a breakdown of this above your final quote.
If you insure through other providers you might have found on a comparison site, you might have noticed those low prices you first secured have crept up each time you renew. This is known as “price walking” – an increase in your premium even though you’ve not made a claim. This is what the new FCA rules, due to come into force in January 2022, are designed to prevent, as it penalises loyal customers, forcing people to scout around each year to find a better price with another provider.
You might see that prices are initially higher that they were following this rule coming into force when looking on comparison sites. This is especially true for highly competitive insurance areas such as car insurance, where the introductory prices are at a level which is unsustainable for the insurer.
Does this mean less shopping around? Not necessarily. Having insurance that fits your needs is important if you’re to get the best value from your policy. Extras that you don’t need might come with an added expense, but you can at least rest assured that when you’ve found the right policy, you’ll not be compelled to find an alternative each year for fear of the price going up for no reason.
A little reminder about how an AK subscription works
Because we offer cover through a subscription at Arma Karma, you don’t need to worry about an annual renewal date coming up and passing you by, as you can cancel at any time with no extra fees. Our starting price is £1.99, with your quote based on what you want to insure. And don’t forget, that monthly cost will be supporting a good cause, as 25% of our commission revenue from your policy will be going to one of our charity partners. Which of those four, is up to you!
To find out how much it will cost to cover your stuff, click here to get a quote in minutes.
Arma Karma Limited is registered in England and Wales under company number 12002692.
Arma Karma Limited is an Appointed Representative of Innovative Risk Labs Ltd, which is authorised and regulated by the Financial Conduct Authority. Firm reference number 925873.