FCA considering restrictions on insurance price hikes

The Financial Conduct Authority (FCA) said on Friday that it could ban or restrict insurers from raising prices for consumers who renew yearly in an effort to tackle high premiums.

The regulator outlined its pricing concerns in a market study of home and motor insurance, stating that competition is not benefiting all consumers in these markets due to a number of common practices.

These included selling policies at a discount to new customers before increasing premiums when policies are renewed and raising barriers to hinder customers from switching to other providers.

As well as restrictions on price increases, the FCA said it was considering banning practices that could discourage switching and making firms increase the clarity of their dealings with customers.

The regulator said it was keen to harness the benefits of innovation so that general insurance markets benefit positively from technological developments.

Christopher Woolard, executive director of strategy and competition at the FCA, said: "This market is not working well for all consumers. While a large number of people shop around, many loyal customers are not getting a good deal. We believe this affects around 6 million consumers."

The FCA estimated that these consumers could save a total of around £1.2bn per year if they paid the average premium for their risk.