General insurance pricing practices - Citizens Advice response to the FCA’s interim report

General insurance pricing practices - Citizens Advice response to the FCA’s interim report [ 150 kb]

We are pleased to respond to the FCA’s interim report on ‘General insurance pricing practices.’ Citizens Advice provides free, independent and impartial advice to anyone who needs it. In 2018-19, our staff and volunteers provided advice to consumers needing help with more than 16,000 problems with mortgages, savings, retail banking and insurance. 

We have long been concerned about unfair pricing practices across consumer markets, particularly as people who come to Citizens Advice can often be the hardest hit by unfair pricing practices. In September 2018, Citizens Advice made a super-complaint to the Competition and Markets Authority about the excessive prices charged to dis-engaged consumers in 5 markets. This complaint detailed the evidence we collected on the loyalty penalty faced by consumers. We estimated that across 5 markets, 8 out of 10 households pay a loyalty penalty, equating to £4.1bn annually. The CMA found this to be a plausible estimate of the loyalty penalty and urged regulators to take remedial action.

We welcome the FCA’s study of general insurance pricing practices, and the opportunity to comment on the analysis and the proposed remedies. Given the scale of the problem identified and its impact on vulnerable customers, it’s crucial that the remedies the FCA introduces do not fall short. Our response is structured as follows:

• The need to act to protect consumers in the insurance market - particularly vulnerable consumers

• Assessing remedies and their suitability

• The principles and outcomes that remedies should lead to

• Applying this framework to the FCA’s proposed remedies

• Concluding remarks.