Martin Lewis urgently warns every motorist and homeowner about insurance rules
Martin Lewis has once again warned every motorist and homeowner about new insurance rules that begin in a few weeks.
MoneySavingExpert’s founder predicts prices will rise once the change goes into effect – and says now is the time to act, even if your policies aren’t yet to be renewed.
The Financial Conduct Authority is rolling out what Mr. Lewis called a “monumental shock” affecting auto and home insurance.
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The new insurance rules come into effect on January 1, 2022 and will ban the âloyalty penaltyâ – the practice of increasing prices for long-term loyal members while offering cheaper deals to attract brand new customers.
In his latest newsletter from MoneySavingExpert.com, the consumer champ wrote: âOn January 1st, when Big Ben hits midnight and is born in 2022, and while the champagne corks and party bangers pop, we will enter a brave new world of insurance.
âThis is the day that the regulator, the Financial Conduct Authority, introduces new, hopefully better rules to turn the mainstream insurance market upside down. In the short term, however, this change could lead to a rise in prices for those switching my last chance-Clarion-Call to get offers now, just in case. “
Even if you’re not on the verge of a renewal, the consumer champion advises it is still worth checking out.
He said: “Find a cheaper policy and you can usually cancel your existing one and as long as you have not raised or reported an incident in that insurance year you should get a pro-rated refund for the remaining time less a Â£ 50 one-time administration fee (check You again). “
The best time to renew your home insurance is 21 days before the due date and 23 days for auto insurance.
Mr. Lewis first raised the issue in October and issued the new reminder as the rule change date approaches.
He says it could save people hundreds of pounds by renewing their existing policies – but it could also mean the end of super cheap switching deals.
The rule is also “channel-specific” – meaning those who have previously signed up with an insurance company via a link on a price comparison site must receive the same offers and discounts as those who are new to the same site.
It could still differ from other websites’ prices, he warned.
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However, he suspects that new customer prices will rise as loyal customer prices go down, so that both premiums meet somewhere in the middle. He also believes that this will result in a lot fewer mega-cheap deals for the move.
He advises customers to look for better deals now, even if their renewal is a long way off, as if you switch you should get a refund from your existing policy.
The FCA released a report that found that six million existing insurance customers would have saved a combined Â£ 1.2 billion in 2018 if they had not been overcharged just for their loyalty.
It says: âMany companies offer low prices in order to win new customers. Plus, they use sophisticated processes to get the best deals out to customers who they believe they won’t switch in the future and will therefore pay more.
“Insurers will be obliged to offer new customers a price that is no higher than what they would pay as a new customer.
âIt is likely that companies will stop offering unsustainably cheap deals to some customers. However, the FCA estimates that these measures will save consumers Â£ 4.2 billion over 10 years by removing the loyalty penalty and making the market work better. “
Sheldon Mills, Executive Director, Consumer and Competition at FCA, said, âThese measures will put an end to the very high prices of many loyal customers.
âConsumers can still benefit from shopping or negotiating with their current supplier, but no additional fees will be charged when they renew just because they are an existing customer.
âWe’re making the insurance market work better for millions of people. We will monitor closely how the market moves in the future and to ensure that companies continue to provide fairer value to consumers. “
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