Brokers warn dual pricing debate should not focus solely on price

Experts say the FCA should also consider value and quality of service, after the regulator hinted at a potential ban on dual pricing in its interim report.


Brokers have stated they were not surprised by the Financial Conduct Authority’s (FCA) criticism that the home and motor insurance markets are not working well for all consumers.

Last week the regulator published its general insurance pricing practices interim report, where it outlined that it was considering a ban on dual pricing.

Carl Shuker, CEO of A Plan stated: “I think it wasn’t unexpected and it wasn’t a surprise, the industry does have a real challenge to address.”

Meanwhile, Ian Donaldson MD of Autonet Insurance noted that Ardonagh Group and Atlanta are focusing on dual pricing.

He added: “Of course we want to make sure we’re going to be in line with what the regulation is going to be, although it looks like there’s going to be more to come from the regulator yet, this almost felt like a warm-up to the next level.”

An unnamed broker described dual pricing as an “obvious problem”, but noted that it was important for the industry not to encourage people to shop around based only on price without taking into account value and service.

The broker added: “That’s not saying that dual pricing is right, but equally just moving for the sake of saving a few pounds without looking at the other elements of the offer may be counterproductive.”

Vulnerable customers
Last week, market experts warned that some of the potential remedies put forward by the FCA would lead to “unintended consequences”.

But brokers agreed that the FCA’s conclusions that the home and motor insurance markets are not working well for customers are fair. 

Shuker said: “We see lots of evidence of people overpaying, particularly home insurance and especially the more vulnerable, and that tends to be the elderly.”

Vulnerable customers form part of the argument against dual pricing, it featured in the Citizens Advice super-complaint put forward in September 2018 which was closely followed by the launch of the FCA’s investigation into pricing practices in the motor and home market.

Both Shuker and Donaldson detailed that their businesses work with a panel of insurers in efforts to protect their clients.

Shuker commented: “The longer you’ve been with us, the less you pay, because we do negotiate ten year discounts with insurers and we do operate a panel of insurers which means that if an insurer a is getting too expensive then we’ll offer a change in renewal to insurer b.”

Shopping around
Donaldson added that the high levels of media attention meant that the group saw an uplift in activity across Atlanta’s call centres.

“We could only align it to the fact that that the news broke in such a big way as it did, so its certainly having an impact on consumers in regards to shopping around.”

And Shuker argued: “There is much more to insurance than just simply price, there is service as cover and so on, so I do think the debate should really be around overall value, not just price though.”

Insurer response
​​​​​​A spokesperson for LV has said that the insurer supports increased clarity for consumers in reference to when they are purchasing and renewing car and home insurance. 

They added: “While we understand the FCA’s suggestions around auto-renewal we believe that this generally works for the benefit of customers by helping to ensure their homes and cars are always protected.

“We have concerns that restrictions in this area could lead to people inadvertently losing this vital and often legal protection. We’re pleased to see that the FCA wishes to encourage further innovation.” 

The statement concluded: “Insurers have a long history of innovation and we would want to ensure that any remedies do not unintentionally stifle competition and innovation. We’ll continue to work with the FCA to better understand its proposals.”

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