The Financial Conduct Authority (FCA) is looking into the issue of dual pricing, according to its Business Plan for 2018/19.
The regulator stated it will continue work on pricing practices in retail general insurance.
It said: “If competition is working well in a market, it should not overly disadvantage existing customers over new customers.
“While many firms have made progress in putting customers more firmly at the centre of their business models, they need to further improve both competition and their standards of treatment for existing customers.”
The FCA added: “Firms should not give longstanding customers less attention than new customers or treat them in a way which results in poorer outcomes.”
Dual pricing, when new customers are charged a lower price in the first year while existing customers pay more, has been widely debated in the insurance industry for years.
The system was recently slammed by charity Citizens Advice, which called on regulators to set targets to reduce the number of people who pay the loyalty penalty, and investigate solutions for vulnerable customers.
In addition, the FCA said it would look at claims inflation in the motor insurance sector.
It stated: “We will carry out diagnostic work to assess how far brokers and motor insurers are inflating claims through referrals to CMCs and keeping volume discounts from their own repairers.”
In its Business Plan the FCA also pledged to focus a high level of resource on the regulatory implications of Brexit.
The regulator predicted a total EU exit cost of £30m, and increased its annual funding requirement for 2018/19 to £543.9m.
Article is care of www.insuranceage.co.uk this original article can be found here.