How my insurance company got round the FCA ruling

SimonABA

Insurance companies made a lot of money by surcharging existing customers and hoping they wouldn't notice or be bothered to complain.   The FCA stopped this dodgy practice last January.  

When I got my car renewal letter from Direct Line recently, I went on their website to get a quote as a new customer and was surprised that it was 30% less than my renewal, in spite of the FCA rule and the promise on the Direct Line website "Existing customers will always pay the same or less than a new customer with like-for-like details.".   

I made an official complaint and just learned from them that they got round the FCA ruling by adding extra criteria (in my case home ownership) and assuming that you would have chosen the riskier option which gives them an excuse to surcharge you.  Moral of the story is still check renewal price with new customer price and complain if its more.   They gave me £114 back

dunstonh

I made an official complaint and just learned from them that they got round the FCA ruling by adding extra criteria (in my case home ownership) and assuming that you would have chosen the riskier option which gives them an excuse to surcharge you.  Moral of the story is still check renewal price with new customer price and complain if its more.   They gave me £114 back 

Different product versions are allowed to charge different pricing where there are differences in the versions (and not just an incremental version number)

[Deleted User]

dunstonh said:

I made an official complaint and just learned from them that they got round the FCA ruling by adding extra criteria (in my case home ownership) and assuming that you would have chosen the riskier option which gives them an excuse to surcharge you.  Moral of the story is still check renewal price with new customer price and complain if its more.   They gave me £114 back 

Different product versions are allowed to charge different pricing where there are differences in the versions (and not just an incremental version number)

In other words the new rules are worthless, as they are easily subverted.

Thanks for confirming what some of us already knew.

dunstonh

In other words the new rules are worthless, as they are easily subverted.

No they are not worthless.    They actually seem to be working well on the whole. 

However, providers will make changes naturally depending on the state of the market and who they want to market their policies to.   These decisions are not static.  Many providers have multiple versions on offer at the same time or via different distribution channels.

DullGreyGuy

[Deleted User] said:

dunstonh said:

I made an official complaint and just learned from them that they got round the FCA ruling by adding extra criteria (in my case home ownership) and assuming that you would have chosen the riskier option which gives them an excuse to surcharge you.  Moral of the story is still check renewal price with new customer price and complain if its more.   They gave me £114 back 

Different product versions are allowed to charge different pricing where there are differences in the versions (and not just an incremental version number)

In other words the new rules are worthless, as they are easily subverted.

Thanks for confirming what some of us already knew.

I would strongly suggest the OP isnt talking about a case of getting around new rules at all.

Lets say insurers discovered that left handed drivers were actually 50% safer than right handed and 25% more than ambidextrous. Obviously they will want to introduce this as a rating factor as at the moment they are overcharging lefties and under charging right handed folk. For their back book however they dont have this information and so have to maintain the status quo as you cannot derive it information held nor source it from a public database. 

Its not in breach of the rules to price an unknown handed person above a lefthanded person. If renewers call up and they're lefties the data can be captured and premium improved.

Introducing new questions causes challenges though... dealing with the influx of calls, managing aggregators to get them to add it, updating your APIs to enable it to work, updating your rating logic to include it etc plus for each additional Q asked the more people drop out the quote process. You arent going to be randomly adding new questions on a whim to "get round the rules" and in principle if some customers get a better price because of it, some customers must be getting a worse price for a net neutral impact (people were always left/right handed, it just wsnt known which was which)

[Deleted User]

DullGreyGuy said:

[Deleted User] said:

dunstonh said:

I made an official complaint and just learned from them that they got round the FCA ruling by adding extra criteria (in my case home ownership) and assuming that you would have chosen the riskier option which gives them an excuse to surcharge you.  Moral of the story is still check renewal price with new customer price and complain if its more.   They gave me £114 back 

Different product versions are allowed to charge different pricing where there are differences in the versions (and not just an incremental version number)

In other words the new rules are worthless, as they are easily subverted.

Thanks for confirming what some of us already knew.

I would strongly suggest the OP isnt talking about a case of getting around new rules at all.

Lets say insurers discovered that left handed drivers were actually 50% safer than right handed and 25% more than ambidextrous. Obviously they will want to introduce this as a rating factor as at the moment they are overcharging lefties and under charging right handed folk. For their back book however they dont have this information and so have to maintain the status quo as you cannot derive it information held nor source it from a public database. 

Its not in breach of the rules to price an unknown handed person above a lefthanded person. If renewers call up and they're lefties the data can be captured and premium improved.

Introducing new questions causes challenges though... dealing with the influx of calls, managing aggregators to get them to add it, updating your APIs to enable it to work, updating your rating logic to include it etc plus for each additional Q asked the more people drop out the quote process. You arent going to be randomly adding new questions on a whim to "get round the rules" and in principle if some customers get a better price because of it, some customers must be getting a worse price for a net neutral impact (people were always left/right handed, it just wsnt known which was which)

Insurance companies are constantly updating their risk profiles and their products. The fact that one change makes the rule not apply means that even when not done deliberately, it happens so often as to make it ineffective.

DullGreyGuy

[Deleted User] said:

DullGreyGuy said:

[Deleted User] said:

dunstonh said:

I made an official complaint and just learned from them that they got round the FCA ruling by adding extra criteria (in my case home ownership) and assuming that you would have chosen the riskier option which gives them an excuse to surcharge you.  Moral of the story is still check renewal price with new customer price and complain if its more.   They gave me £114 back 

Different product versions are allowed to charge different pricing where there are differences in the versions (and not just an incremental version number)

In other words the new rules are worthless, as they are easily subverted.

Thanks for confirming what some of us already knew.

I would strongly suggest the OP isnt talking about a case of getting around new rules at all.

Lets say insurers discovered that left handed drivers were actually 50% safer than right handed and 25% more than ambidextrous. Obviously they will want to introduce this as a rating factor as at the moment they are overcharging lefties and under charging right handed folk. For their back book however they dont have this information and so have to maintain the status quo as you cannot derive it information held nor source it from a public database. 

Its not in breach of the rules to price an unknown handed person above a lefthanded person. If renewers call up and they're lefties the data can be captured and premium improved.

Introducing new questions causes challenges though... dealing with the influx of calls, managing aggregators to get them to add it, updating your APIs to enable it to work, updating your rating logic to include it etc plus for each additional Q asked the more people drop out the quote process. You arent going to be randomly adding new questions on a whim to "get round the rules" and in principle if some customers get a better price because of it, some customers must be getting a worse price for a net neutral impact (people were always left/right handed, it just wsnt known which was which)

Insurance companies are constantly updating their risk profiles and their products. The fact that one change makes the rule not apply means that even when not done deliberately, it happens so often as to make it ineffective.

Risk profiles dont get them around the new rules.

For product changes they need to be of substance, not just changing a coma for a semi-colon etc. Most insurers retire the old product upon a change because administratively its a major ballache to have 50 different variants of car policies in force as all staff have to be trained on all of them, suppliers have to be made aware of the differences, capital models have to reflect the differences etc etc. Hence if you look at 90% of companies websites that show policywordings on their site they have at most policies covering 18 months with a statement to pick based on your policy inception date not 30 years worth of wordings telling you to pick based on when you first became a customer.