Insurtech Urban Jungle has welcomed a survey published today (Tuesday) that could mean policy holders save £3.7bn a year.
The Financial Conduct Authority has called for an end to ‘price walking’, where an insurer automatically increases the policy renewal price without any changes to the cover, even if no claims have been made. The practice means loyal customers typically pay more than new ones.
Jimmy Williams, CEO of insurtech company Urban Jungle, says price walking is wrong and is supporting this move to curtail it.
“Price walking is completely systemic in the insurance industry. Many firms are doing it and we think it should stop so we welcome the FCA’s call.
“The reason it happens is that price comparison websites are so important to insurers. The only way to win on price comparison is to be the cheapest. It’s rational to do everything you can to be the cheapest provider at minute one, and layer on a load of hidden costs and price increases later.”
Williams says he welcomes the ban on price walking but warns of other bad practices in the sector.
“The change caused by this could be profound. Price comparison websites could be heavily impacted as, suddenly, the amount you could save from switching your insurance goes down dramatically. So people might switch less often.
“For insurers themselves, it should make price competition much more transparent which is, in itself, a good thing. However, I suspect insurers will come up with even more innovative ways to rip their loyal customers off.
“The most likely to me seems that they will give away “free” but meaningless cover to more loyal customers and use that to justify the difference between new quotes and renewal ones.”
Williams also calls on the FCA to ensure there’s greater transparency in the industry.
“The regulator still hasn’t banned hidden fees, or large interest payments for paying monthly, so you should watch out for those, too.
“We’d like to see the regulator issue a ban on cancellation fees. They are a clear and obvious barrier to switching, and typically bear no relation to the cost of processing. Urban Jungle doesn’t charge a cancellation fee on any of its products.”