UK regulator investigating high charges for insurance renewals
LONDON, July 6
LONDON, July 6 (Reuters) - Britain's financial watchdog is investigating whether insurers charge customers unfairly for automatic policy renewal and take advantage of clients who do not shop around.
Britain's head markets regulator Martin Wheatley told British lawmakers in a letter made public on Saturday: "We will look at issues like premium charging in a new light."
"In particular we will be interested in whether firms are taking advantage of consumers who simply accept what they are offered."
The letter, dated March 28, was sent to the Treasury Select Committee chairman Andrew Tyrie in response to concerns Tyrie had raised about automatic renewal, which is included in policies to ensure customers do not inadvertently find themselves without cover.
Tyrie noted that not all clients were able to shop around particularly as this is most usually done now using price comparison websites. Elderly consumers unfamiliar with the internet are thus at a disadvantage.
"Such practices appear to penalise long term loyalty and are to the detriment of those less able to access price comparison resources, particularly the elderly," Tyrie said in his original letter to the Financial Services Authority (FSA) and the Association of British Insurers (ABI).
ABI director general Otto Thoresen said in response to Tyrie's letter that "extreme differences" between automatic renewal prices and those charged to new customers were unusual, though he noted that varied pricing aimed at attracting new business was to be expected.
Since Wheatley's letter was sent the FSA has been replaced by the Financial Conduct Authority, which has the power to boost competition and protect consumers by banning or changing products.
In a statement released on Friday, Tyrie said: "The Committee will scrutinise closely the information gathered by the FCA."
(Reporting by Chris Vellacott; Editing by Sophie Walker)
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