Car and home insurance quotes should detail previous year’s premium so policyholders can spot price rises, according to the Association of British Insurers (ABI).
The Guardian reports that millions of people will find it easier to detect being overcharged for their home and car insurance if industry proposals are adopted by the City regulator.
The proposed rule change would require home and motor insurance renewal letters to flag up the amount someone paid the previous year alongside their renewal quote for the coming 12 months – so they would know immediately if their premiums had gone up and by how much.
In recent years some insurers have been accused of taking advantage of loyal customers by bumping up the premiums of policyholders who allow their cover to be renewed automatically.
Critics have claimed the fact that the letters policyholders receive only give the renewal quote means some customers will simply accept the new quote and may not realise they are being asked to pay much more than previous years.
The Association of British Insurers (ABI), the industry’s main trade body, said it had written to the Financial Conduct Authority (FCA) to propose new minimum standards of information that would apply across the market. If adopted, the new rules would cover all policyholders, whether they buy their cover direct from an insurer or from a broker, their bank or a price comparison website.
The ABI said it was proposing that all renewal documents for motor and home buildings and contents cover should include the premium the customer paid the previous year alongside the renewal quote “for easy comparison”.
Huw Evans, the ABI’s deputy director general, indicated that the trade body was hoping the measures could be adopted by December 2015.
“Insurers want to make renewing your insurance policy easier and clearer to understand, by reminding you of last year’s premium and flagging up introductory discounts,” he told the Guardian.
“Our proposal, if adopted by the FCA across the market, would significantly improve transparency for millions of customers.”
The proposed measures do not include other annually renewable policies such as travel and pet cover.