Changes to Insurance Pricing Practices by the industry regulator, the Financial Conduct Authority, are designed to improve the way general insurance markets function. In simple terms, anyone renewing their insurance with an existing insurer will now pay no more than a new customer would. The new rules aim to increase transparency for customers who are renewing their insurance products.

The process by which products are heavily discounted in year one, then increased at renewal and again in subsequent years, known as ‘price walking’ has been effectively outlawed by the FCA from January 20221. Essentially, existing customers were subsidising new ones, to their financial detriment. Customers who remain loyal to an insurer will no longer be subsidising people who switch to other insurers offering cheap first year premiums.

Those insurers have benefitted from the inertia of many customers, who have therefore paid increasingly more for their cover year on year. This has allowed insurers to use those profits to offer new borrowers enticing first year discounts2

It also means that your financial adviser will now be in a stronger position to help find policies specifically tailored to customers but with premiums that no longer have to compete against heavily discounted deals offered online. Most importantly, it will change the emphasis from cheapest cost to value for money.

In order to comply with the new rules, insurance companies have to abandon heavy discounting for new policyholders, in order to ensure that existing customers are not paying more at renewal.

As new policy and renewal premiums become more equivalent, so the adviser is again in the best position to offer real advice based on actual benefits other than price.



  • New rules mean that renewing home insurance with an existing insurer will now cost no more than a new customer pays
  • Insurers now have to notify customers whether their policy T’s & C’s provide for automatic renewal, the effect of the renewal, and how the customer can cancel the automatic renewal element at any time
  • Insurers will no longer be able to subsidise large introductory discounts to new borrowers via existing customer renewal increases
  • Auto renewal facilities, where policies automatically renew without direct customer intervention, will only be allowed if insurers provide adequate warning of policy and premium changes

Source: HLP Newsletter Jan 2022