Insurance price walking and the new law

Countist

Hi there,

I recently received a home insurance renewal quote with an increase of 38% with no history of claims. The renewal letter notes that a new customer would pay the same as me.

This was with Homeprotect who I believe are associated with/use Axa to underwriter their policies.

I note that the law was changed to stop "price walking" in 2022 as below:
https://www.moneysavingexpert.com/news/2021/10/martin-lewis--the-big-insurance-rule-change-on-1-jan-2022/

So I went on a price comparison website, put in my details (assumption being I've remembered to keep everything exactly the same to the best of my ability) and there's a policy with Axa Home which is about 50% of the price on my renewal quote. There isn't a quote from Homeprotect.

So as far as I am concerned my price IS being walked up.

I'm rambling a bit, but it just seems to the new law seems a bit toothless. It just seems the company can claim a new customer *would* be charged the same and it's difficult to disprove?

In my case a sister company is offering the same cover for half the price, but I'm sure they'd claim it was a different company and so it wasn't covered by the law so they can get away with it. 

Does anyone know how the law is being enforced, or how someone could complain if they thought it wasn't? Would you have to phone them up and challenge their quote, and if they refuse to budge say you want to raise a complaint and go to the FCA? 

CSI_Yorkshire

"A policy" with AXA Home doesn't mean the same policy.

Buying through different channels is accepted as being different prices, because it costs different amounts to serve.

"Associated with" does not mean the same company.

Your assertion is tenuous at best.  You've found a policy from a company through a sales channel, and are trying to use that to prove that the price rise on a different policy from a different company through a different sales channel is somehow illegitimate.

Your complaint route sounds plausible, but you just don't have any evidence.

MattMattMattUK

Countist said:

Hi there,

I recently received a home insurance renewal quote with an increase of 38% with no history of claims. The renewal letter notes that a new customer would pay the same as me.

This was with Homeprotect who I believe are associated with/use Axa to underwriter their policies.

I note that the law was changed to stop "price walking" in 2022 as below:
https://www.moneysavingexpert.com/news/2021/10/martin-lewis--the-big-insurance-rule-change-on-1-jan-2022/

So I went on a price comparison website, put in my details (assumption being I've remembered to keep everything exactly the same to the best of my ability) and there's a policy with Axa Home which is about 50% of the price on my renewal quote. There isn't a quote from Homeprotect.

So as far as I am concerned my price IS being walked up.

I'm rambling a bit, but it just seems to the new law seems a bit toothless. It just seems the company can claim a new customer *would* be charged the same and it's difficult to disprove?

In my case a sister company is offering the same cover for half the price, but I'm sure they'd claim it was a different company and so it wasn't covered by the law so they can get away with it. 

Does anyone know how the law is being enforced, or how someone could complain if they thought it wasn't? Would you have to phone them up and challenge their quote, and if they refuse to budge say you want to raise a complaint and go to the FCA? 

What CSI says above is correct with regard to channels, not being the same company etc.

If you do not like the price they are offering and prefer one of their competitors, then take the price the competitor is offering. 

DullGreyGuy

Countist said:

Hi there,

I recently received a home insurance renewal quote with an increase of 38% with no history of claims. The renewal letter notes that a new customer would pay the same as me.

This was with Homeprotect who I believe are associated with/use Axa to underwriter their policies.

I note that the law was changed to stop "price walking" in 2022 as below:
https://www.moneysavingexpert.com/news/2021/10/martin-lewis--the-big-insurance-rule-change-on-1-jan-2022/

So I went on a price comparison website, put in my details (assumption being I've remembered to keep everything exactly the same to the best of my ability) and there's a policy with Axa Home which is about 50% of the price on my renewal quote. There isn't a quote from Homeprotect.

So as far as I am concerned my price IS being walked up.

I'm rambling a bit, but it just seems to the new law seems a bit toothless. It just seems the company can claim a new customer *would* be charged the same and it's difficult to disprove?

In my case a sister company is offering the same cover for half the price, but I'm sure they'd claim it was a different company and so it wasn't covered by the law so they can get away with it. 

Does anyone know how the law is being enforced, or how someone could complain if they thought it wasn't? Would you have to phone them up and challenge their quote, and if they refuse to budge say you want to raise a complaint and go to the FCA? 

You need to better understand how the insurance market and the regulations work. The regs say that for the same product (which is more granular than simply "home insurance") via the same channel that renewing customers cannot be charged more than a new client. The obligation sits with the entity setting the price.

Axa is a regulated insurer, they sell their own products direct to market, they have alternative products they sell via brokers, they will also put their pen to other people's products on a delegated or non-delegated basis.

Home Protect is a regulated intermediary who writes their own Home insurance product with delegated authority from an insurer, currently Axa but have been different companies in the past. 

Different products and different company setting the price so pricing is allowed to be different

dunstonh

So as far as I am concerned my price IS being walked up.

No its not as its not the same policy and version.

I'm rambling a bit, but it just seems to the new law seems a bit toothless. It just seems the company can claim a new customer *would* be charged the same and it's difficult to disprove?

But you are not comparing buying from the same distributor.    We don't know what terms AXA offer that product to homeprotect and we dont know what home protect add on top of that.  However, it will be different to what AXA offer via different distribution methods.  It may even be a bespoke product or have adjustments to their default.

In my case a sister company is offering the same cover for half the price, but I'm sure they'd claim it was a different company and so it wasn't covered by the law so they can get away with it. 

They dont need to claim it as it is an obvious as you are wrong.
What makes you think it is a sister company?  A quick look suggests that Homeprotect is a trading name of Avantia Insurance Ltd which us ultimatly owned by Eci Partners Llp.    Not in the AXA group of companies.

Does anyone know how the law is being enforced, or how someone could complain if they thought it wasn't? 

Its not a law.  It was an FCA guideline.   The FCA is recording data via the usual returns supplied by regulated companies.

Would you have to phone them up and challenge their quote, and if they refuse to budge say you want to raise a complaint and go to the FCA? 

You cannot complain to the FCA (well, you can but the FCA wont look at it. They will forward it to the company you complain about).

However, as your complaint is bogus, it would be an easy rejection.

The bottom line is that different insurers will have different pricing and different product versions for different distribution channels.   Distribution company A may ask AXA to build a product to fit their target market.   Distribution company B may ask AXA to built a product to fit their different target market.   One may be a quality offering.  The other a budget offering.   Company B may have a much larger level of distribution and get improved terms over company A.

The guidelines are about the same product (some caveats on how different a version must be) via the same distribution channel and method.  (i.e. phone pricing can be different to web pricing or in-person pricing).

Countist

Thanks for the responses, there have been some excellent answers as to why the policies are not the same and of course I'm very happy to switch provider it was more understanding how the new guidance worked.

What would have happened if I *had* found a homeprotect policy on the price comparison website here for that lower price?

From the below:

"It's not a law. It was an FCA guideline. The FCA is recording data via the usual returns supplied by regulated companies."

So I'm is the answer is nothing and it's just something the FCA monitor themselves?

And if that is the answer that is fine, I'm just trying to understand the impact of the new guidance because from people I speak to (understand anecdotes are a tenuous form of evidence ofc) everyone's home insurance still seems to be going up year on year (by more than inflation).

DullGreyGuy

"Guideline" is really underplaying it... the FSMA 2000 gives the FCA the legal powers to define the rules by which financial services companies must play and the ability to fine them for failing to follow said rules, last year saw £216m in fines handed out by the FCA, down from £568m the year before.

So the FCA is requiring renewal data to be provided to them and so are monitoring it via that. The FCA also has the right to drop by and look into any aspect of the regulated business that they want. 

The other route is via customer complaints that go to the Financial Ombudsman who report to the FCA on cases of concern and trends both of individual companies and industry sectors. 

dunstonh

What would have happened if I *had* found a homeprotect policy on the price comparison website here for that lower price?

If you bought the home protect policy via the same price comparison site previously and the terms were the same, then it would be a breach.    However, if it was bought via a different distribution previously, it would not be a breach.

So I'm is the answer is nothing and it's just something the FCA monitor themselves?

The FCA collects a lot of data from regulated firms.  Historically, the regulator wasn't very good at using the data it collected to identify issues.   However, there have been signs in recent years that the data is starting to go through algorithms that lead to companies with issues being identified.     Also, historically, the regulator liked to focus on its hot potatoes.  i.e. the issue of the moment.    So, its likely that the FCA will continue putting more resources into the data in the short term.    That said, there is a bigger hot potato that started last week which is going to dominate the regulator for some time.

And if that is the answer that is fine, I'm just trying to understand the impact of the new guidance because from people I speak to (understand anecdotes are a tenuous form of evidence ofc) everyone's home insurance still seems to be going up year on year (by more than inflation).

Inflation is not a single rate.  We get the various headline rates but they are from a sample of things.   Home insurance is going up because claims sky rocketed over 2022.   They always do in drought years.  They also tend to go up in recessions (when crime rises).   Inflation was a major issue and inflation for building materials and labour was higher than the headline rate.  The inflation rate of construction was 15% over 2022.    Plus, there is generally a shortage of certain materials and builders.     Claims are taking longer and consequential losses increase.    

Motor and home insurers were showing their biggest loss in a decade in 2022.

Countist

Thanks

The last two responses were in particular excellent at providing the background and flavour to everything which has been really educational and useful. 

I will change provider and move on with my life...

I presume the new hot potato you refer to is interest rates not being passed onto savers?

CSI_Yorkshire

Countist said:

I presume the new hot potato you refer to is interest rates not being passed onto savers?

Or perhaps the Robin Forster case?

DullGreyGuy

CSI_Yorkshire said:

Countist said:

I presume the new hot potato you refer to is interest rates not being passed onto savers?

Or perhaps the Robin Forster case?

Depends if you mean in general or for the insurance sector - for the later we have Customer Duty