FCA Proposal Seen To Drastically Reduce Car Insurance Prices

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Repair fees from roadside accidents and breakdowns can be very expensive. And car insurance premium payments can be costly, especially if your risk levels are high. Risk levels are based on a motorist’s history of driving. That should be encouragement enough to keep your driver’s licence clean by following traffic rules and carrying out proper vehicle maintenance to avoid accidents and breakdowns. Simple checks on aspects such as tyre pressure and your Varta battery performance can help you avoid having to make a claim on your car insurance policy and that helps keep your premiums down. Choosing Varta car batteries with a lengthy warranty period will also help reduce the expense of driving for motorists.

ut now, new proposals for decreasing insurance policy prices are set to ease the expense for many drivers in the UK.

The Financial Conduct Authority (FCA) has recently announced a proposal to ban a popular car insurance scheme that isn’t at all beneficial to policyholders: when insurers routinely increase their prices for insurance renewals. According to the FCA’s study, this change could save consumers around £3.7 billion over the next 10 years.

Insurance providers have been making use of a pricing strategy that lures in new clients by offering them a low starting package, but then charging them higher and higher premiums in each following year. This practice is known as price walking, which is effective in profiting insurance companies at the expense of their customers.

Research shows that there are unreasonable price differences when analysing quotes for new and existing customers, with over 8.5 million pricing interventions across home and motor insurance worth £641 million.

The FCA proposes that home and auto insurance policyholders should not have to pay higher fees in subsequent to renew their policy than they did when they were new customers.

If this change comes into force, then insurers will have the freedom to establish prices for new customers, but will be limited to either maintaining the same fee or charging lower fees for the following renewal periods. However, many fear that this could cause some of the cheapest deals to disappear from the market.

The interim chief executive of the FCA, Christopher Woolard, explained during a virtual press conference that people would need to be more proactive when looking for the best deals out there.

Many low-priced plans today are unsustainable in the long run, and they are designed simply to attract customers initially who will then renew their policies yearly, no matter whether the price rises, and thereby become more profitable over the longer term. According to Woolard, the FCA’s mission is to free the market from this scheme.

According to the FCA, there are 10 million policies in home and motor insurance held by customers who have stayed loyal to their providers for five years or more. In 2018, they identified 6 million accounts that were charged high or very high margins. If the proposed modification is implemented, they claim that in ten years, consumers will save a whopping £3.7 billion collectively.

The chief executive of Citizens Advice, Dame Gillian Guy, expressed her relief that the FCA has finally attended to their two-year-old complaint on the loyalty penalty. She urged them to expedite the process of cracking down on this systemic scam, and potentially bring insurance prices down by £370 million annually.

Huw Evans, the Association of British Insurers’ director-general, stated that the ABI supports the FCA’s initiative to push insurance companies to improve their services in customers’ favour. They will continue to coordinate with the FCA to make sure the best possible measures are enacted.

A decision on the FCA’s proposal is expected by 25 January next year and could be implemented as early as the third quarter of 2021.

Fair Prices And Lifetime Warranties For Everyone At Orius Batteries

It’s worth noting that even if the FCA successfully executes its proposal, firms can still charge more expensive premiums for customers who have higher risk levels. You will still need to drive carefully, properly maintain your vehicle, and ensure that it is road-worthy.

With high-quality Varta car batteries, you won’t have to worry about power issues that can potentially cause serious car problems. Orius Batteries believes in rewarding trusting customers – new or returning – and looks forward to welcoming them back for more great deals.

With our regular discounts, you can buy a top-class Varta battery at an affordable price. Not only that, but all batteries purchased from our store include a lifetime warranty that guarantees you the best value for your money. Shop now to enjoy all of these fantastic perks and more!

Published at: 07-10-2020