The Financial Conduct Authority (FCA) brought in new regulations in January 2022 to end the practice known as “price-walking”. Many loyal customers faced increasing insurance policy premiums each year while new customers were often rewarded with a discount or special pricing. Under the new guidelines this is no longer permitted.
However, while many people believed that this change would see a reduction in policy costs for many, this is not necessarily the case; the reality is that many premiums increased, by an average of around £25 at the end of 2021 and around double that over the past three months.
The new rule means that existing customers cannot be charged more than those new to a brand, assuming a like-for-like set of circumstances such as location, no claims bonus, make of vehicle, and so on.
Another reason for rising premiums could be the increase in drivers on the roads as a result of COVID regulations being eased – with more people commuting or travelling for work or business, the frequency of accidents and therefore policy claims is once again rising – this can have a spin off effect as insurers raise their prices. Whether you’re a personal or motor trade customer, your policy may well have been increased at renewal.
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What can you do to mitigate these increased costs?
Even if you’re very happy with your current insurer, it’s always wise to shop around and compare prices. The ideal time to do this is around 3 weeks prior to renewal, when insurers typically offer the biggest discounts.
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An estimated 45% of people can expect to save money by changing to a like-for-like policy with a new insurer, and many can even save money with their existing insurer simply by using a price comparison or online renewal service, or even by haggling on the phone.
It is also important to check your policy terms, especially if you have changed your driving habits since your last renewal. Reducing your annual mileage on personal or trade plates can see a reduction in insurance costs, while it’s also important to provide updated information if you have added a better security system to your vehicle.
Similarly, parking your car on a driveway or in your garage will see a reduction in costs compared to parking in a public street.
With the huge number of price rises affecting almost everyone, owners of new and used vehicles would be well advised to do their private or motor trade insurance broker research at renewal time. It’s also worth continuing to shop around even after accepting a new quote – you will usually have a cooling off period of around 14 days when you can switch insurer without penalty.
If you believe that the new rules around price walking have actually seen your existing insurer’s premium rise, it’s well worth shopping around and seeing what options are available.