Renewal transparency and engagement rules

Posted on: 24 May 2017

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On 1 April 2017, new rules to increase transparency and engagement at renewal came into effect.

These rules were introduced to address concerns about consumer engagement, improve the treatment of 'loyal' customers and promote effective competition between insurers.

In renewal invites, it's now a requirement to show the following information clearly and prominently:
 

The premium for the previous year

Customers must now be able to compare the previous year's insurance premium alongside the price of the current renewal. Any add-ons must also be included when disclosing the previous year's premium.

Where any mid-term adjustments have been made, an annualised premium should be shown to reflect this.
 

A reminder for customers to 'shop around' for the best deal

At the core of the FCA’s new regulation is the call to encourage customers to check their cover and shop around for the best deal at each renewal.

The way in which this is worded can depend on how long a customer has been insured with a particular provider.

For those customers who have been insured for a period of 1 to 3 years with the same provider, the FCA allows some flexibility over the renewal wording so it can be tailored to the needs of the customer and to ensure price and cover are balanced.

It's acceptable, and is actually encouraged, for brokers and intermediaries who shop around on behalf of their customers to communicate the benefits of their insurance product alongside this reminder.

However, it mustn't distract from encouraging the customer to check their cover and shop around.
 

The prescribed reminder wording for customers that have renewed 4 or more times

For those customers who have been insured for a period of 4 years or more with the same provider, the following prescribed message (from ICOBS 6.1.12A) also has to be included:

"You have been with us a number of years. You may be able to get the insurance cover you want at a better price if you shop around."

This is in addition to the message to check that the cover is still appropriate, and must be clearly, accurately and prominently displayed, e.g. on the first page.

The use of the prescribed wording also applies when a policy has been renewed through the same broker 4 or more times - regardless of whether the risk was moved to another insurer.
 

Further information

FCA Policy Statement 16/21 explains the findings of the consultation that preceded the implementation of these rules and confirms final rules.

Find out more about renewal transparency rules at fca.org.uk