Will the eradication of the so-called loyalty penalty in general insurance policies be the death of price comparison websites in the UK? Experts cited by the Financial Times stopped short of saying so, but challenges appear to be looming for these aggregators.
According to the publication, price comparison websites charge insurers around £45 for each policyholder that makes the switch through them. Without the loyalty penalty, though, will there be reasons for consumers to change providers?
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In EY partner Rodney Bonnard’s view, there won’t be as much switching as there used to be.
“Those who feel that if they don’t switch their price will shoot up now know that is less likely to happen,” the Financial Times quoted Bonnard as saying. “It’s not a huge amount of effort but people are busy, so I think if there’s less of a financial incentive then they’ll do that less.”
Oxbow’s Paul De’Ath, meanwhile, called the Financial Conduct Authority’s move to equalise pricing between new and existing clients “quite a dramatic shift” for the market.
Additionally, PwC UK general insurance leader Mohammad Khan believes insureds might see switching as no longer worth it once renewal prices become aligned with premiums for new customers.
