Under the insurance renewal transparency rules, consumers may choose to shop around and speak directly with providers
The FCA’s new transparency rules, which came into force on 1 April, are set to shake up the insurance industry. The renewal transparency rules require providers to give customers more information about the annual rise in premiums before they are automatically renewed.
It is also compulsory for providers’ renewal documents to encourage customers to check the increase in their cover and shop around for the best deal. If a customer has automatically renewed four consecutive times, insurers must send an additional prescribed message encouraging them to shop around.
The new rules have been designed to promote competition in the market. But will consumers really benefit, or will they be left confused, unprotected and out of pocket? And how will this change the role of an intermediary?
Operationally and systematically, intermediaries are unlikely to see an impact in their day-to-day job because they are not responsible for producing or providing renewal documents. However, they can expect to see a huge shift in consumer behaviour.
According to the Association of British Insurers, two-thirds of insurance policies are currently bought through an intermediary. Under the new rules, consumers may well choose to shop around and speak directly with providers instead, under the illusion they will save themselves money.
Intermediaries play a vital role in ensuring consumers get the right deal. If they are cut out, consumers could end up with the wrong cover. A focus on cost over quality could see them take out cheap and basic policies, which could leave them insufficiently protected.
It is more important than ever for intermediaries to demonstrate their worth. And people enjoy buying from people, especially when it comes to purchasing complex insurance policies.
Maintain strong relationships with clients by staying in regular contact with them. As a result, they will make a conscious decision to speak with you when the renewal form is posted through their door.
Hannah Tasker is general insurance manager at First Complete and Pink