Pricing Reforms – what is happening ?

Following the introduction of the FCA new fair pricing regime on 1st January, we have recently undertaken a survey to understand what’s happening.  The results make interesting reading.

When asked what changes have been seen:

* 9% Had seen a reduction in Renewal Premiums
* 51% Had seen an increase in New Business Premiums
* 40% Had seen no change.

On a limited survey of what increases that had occurred it was seen the number of Insurers offering rates had reduced and the resulting cheapest premiums being offered were showing an average of 30% increase.

If, as one would expect the cost of Insurance will become based on renewal pricing, then we would expect to see less churn of clients increased renewal retention, with clients enjoying fair and reasonable rates that they can trust.

The ramification of this will have effects in all areas of the market as it normalises with traditional routes to market being heavily challenged. 

In addition, to complete this perfect storm, we are seeing major claims inflation with repair costs hitting well over 25% year on year and this figure is only increasing. Premium capacity for UK private lines business is reducing which is against improved short-term profitability (the Covid effect). 

Navigating this potential toxic mix, presents challenges and opportunities and all opportunities are good, you just need to understand these and have the right people who can steer you through them.