Price walking
From ACT Wiki
Risk management - transferring & pooling risk - insurance.
Price walking is a practice of charging existing insurance customers more when they renew their policies, compared with new customers.
- Regulator confirms measures to protect customers from the loyalty penalty in home and motor insurance markets
- "Many insurance firms increase prices for existing customers each year at renewal – this is known as price walking. This means that consumers have to shop around and switch every year to avoid paying higher prices for being loyal.
- It also distorts the way the market works for everyone. Many firms offer below-cost prices to attract new customers. They also use sophisticated processes to target the best deals at customers who they think will not switch in the future and will therefore pay more.
- The FCA’s new rules will stop firms price walking. Insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer. It is likely that firms will no longer offer unsustainably low-priced deals to some customers."
- Financial Conduct Authority (FCA) - May 2021
