ERS boss calls for FCA action on dual pricing

The FCA needs to tackle dual pricing urgently, according to ERS chief executive Ian Parker (pictured).

And he called on brokers and Biba to join the clamour and lobby the regulator to halt the practice.

The FCA and the Competition and Markets Authority have both said they will look at insurers charging low premiums for new customers and then bumping up prices for renewals.

The FCA has even fined insurers for failing to implement properly the new transparency rules that state renewal notices must feature prominently the previous year’s premium rate.

But according to Parker, that is not nearly enough.

“It’s all right having cigarette-pack style warnings on renewal notices to customers, but I think there needs to be more direct action,” he told Insurance Times.

“I don’t know precisely what action needs to be taken; but this is a significant issue for customers in the UK, and they’re being massively penalised with insurers overcharging for loyalty.

“How can that be right?” he asked.

And he said it is in brokers’ interests to lobby the regulators and Biba.

“It’s up to insurance brokers to lobby Biba to get much more effective action than is currently being proposed, which is a sort of soft, self-governance and review,” he said.

According to Parker, dual pricing puts brokers at a competitive disadvantage.

“The advantage direct insurers have over the broker-intermediated business is significant, because the broker’s role is to make sure their customers get the best deal every year,” he said.

And while that means brokers’ customers don’t get inflated renewal prices, it also means that they don’t get initial discounts.

“That’s because insurers who are supporting the intermediated channel cannot only write business at effectively the new business price, because they don’t have the benefit of a back-book that’s being overcharged 20%, 25%, 30%,” he said.

“Brokers ought to understand, that is why direct insurers are eating their lunch right now in mass market motor.”