Utility Warehouse leads the way on fair insurance renewal prices for all.
When it comes to renewing insurance cover, most of us fall into one of two camps – those who shop around for the best deals and those who save time by renewing with their existing provider each year. But those who auto-renew are at risk of falling victim to insurers who use ‘price-walking’ strategies. These insurers lure customers in with low introductory-offer prices, then gradually increase their prices mid-contract or at renewal time, penalising loyal customers instead of rewarding them for their loyalty. Unfortunately, many loyal customers are unlikely to switch providers because they don’t realise their renewal prices aren’t competitive and believe their prices are mounting in line with industry-wide cost rises. However, as organisations like the Financial Conduct Authority (FCA) drive awareness about price walking, many are now protecting themselves by taking out insurance with fair, reliable, transparent providers like Utility Warehouse (UW).
Here’s everything you need to know about avoiding price-walking traps, as well as details about the upcoming FCA regulations for fair insurance.
Utility Warehouse’s transparent home insurance
Unlike many other providers, UW customers follow the same, simple, great value pricing structure and enjoy the same range of fantastic benefits when they buy the company’s 5-star-rated home insurance. When renewal time comes around, UW has a panel of six insurers that offer their best prices for the policy the customer requires. UW asks all insurers to re-bid every year for policies with the same level of cover, regardless of who underwrites the policy. UW then switches each customer to the best value service to ensure they never end up paying more than they should when renewing through UW.
UW writes all its insurance policies – instead of insurers – so customers are safe in the knowledge that their cover levels and limits will always stay the same. UW also writes its policies using simple, common language so customers can see, at a glance, exactly what their insurance covers.
Unlike many insurers, UW doesn’t charge its customers a higher rate for spreading the cost of their annual home insurance across monthly payments. Plus, customers who have Boiler & Home Cover with UW also receive a free annual service, 24/7 customer support, and unlimited call-outs. It’s no surprise that independent financial advice experts such as Moneyfacts and Defaqto rate home insurance with UW for both homeowners and tenants. But, unfortunately, UW is in the minority. Insurers who use price-walking strategies are able to squeeze more money out of their customers.
The FCA’s new price-walking consultation
As insurers catch more and more customers out with price-walking tactics, the FCA is now drawing up regulations to stop this unfair practice once and for all. These regulations follow the FCA’s final market study report on insurance pricing, which the organisation published in September (updated in December). This report reveals concerning trends that show many home insurance companies are taking advantage of their customers.
The FCA’s study finds that, on average, customers who’ve been with their home insurance providers for over five years pay £108 more for their cover than new customers. The FCA also concludes that six million policyholders were paying above the average for their insurance in 2018. If these customers had been paying the average rates for their risk levels, they could collectively have saved £1.2 billion that year.
Under the new regulations, the FCA proposes the following.
- When customers renew their home insurance, they should pay the same as new customers who are purchasing insurance through the same sales channel. For example, customers who renew their policies online should pay the same as new customers who are taking out the same policy online.
- Insurers are free to raise their business prices and adjust prices in line with changes to a customer’s risk profile, but they mustn’t otherwise increase renewal prices over time.
- Insurers must provide data to the FCA that proves their pricing practices meet the regulations.
- Insurers must provide clear instructions to help customers easily opt out of auto-renewals.
Aside from its proposals, the FCA also requires insurance providers to publish data on the frequency of their claims, acceptance rates, average claim pay-outs, and claims-related complaints.
Looking ahead, the regulations should create healthy fair, competition in the insurance industry and could save consumers £4.2 billion over a decade.
Responses to the FCA’s proposed consultation
MoneySavingExpert founder Martin Lewis applauds the FCA’s ‘radical’ thinking and suggests the new regulations could also encourage energy and broadband providers to offer more transparent pricing. However, while the new regulations should lead to fairer prices, Martin questions whether renewal prices will drop to match new policy quotes or whether new policy quotes will rise to match renewal prices.
The FCA will review this response (amongst others) by 25 January 2021, at which point the FCA plans to finalise its regulations. However, we don’t yet know when these will come into effect.
In the meantime, UW helps customers to save upwards of £115 each year by ensuring every customer gets the best price for their policy from its insurer panel and updating all paperwork so customers don’t even need to think about their renewal.
Learn more about UW’s home insurance.
About Utility Warehouse
As the only genuine multiservice provider in the UK, UW offers the same deals to new and existing customers, no matter which home services they take – gas, electricity, broadband, landline, mobile services, home insurance, and/or boiler care. UW bundles these home services into one simple, monthly bill, so customers don’t need to balance multiple utilities, payments, and customer support teams.
Not only does UW do all the hard work for its customers when it comes to utilities, but the multi-award-winning company also offers pre-loaded, interest-free cashback cards, which customers can use to access fantastic discounts when shopping with high street retailers such as Wilko, Halfords, M&S, and Sainsbury’s.
On top of its highly regarded customer services and products, the FTSE 250 company has spent the last 20 years developing its network of Authorised UW Partners, which enables individuals throughout the UK to earn income streams. Today, UW’s 45,000-strong group of independent distributors earn residual income and additional bonuses by signing up new customers and growing their Partner teams. These Partners have welcomed 650,000 customers by signing them up over a coffee, often in people’s own homes.
Visit the UW website to learn more about the transparent insurance cover, Partner opportunity, and utility bundles that are proving so popular.