The UK’s personal insurance market will undergo a big shake-up next month, as a sweeping overhaul of pricing rules looks set to disrupt a sector serving millions of customers.
The effect is expected to be most dramatic in home insurance, as the difference in price between new and renewing customers had been higher than in the highly competitive motor insurance market. But any big jump in premiums for new home insurance customers was unlikely to be sustained long-term, De’Ath said, as it would “be competed away by those [companies] with more efficient business models”. Some analysts believe pricing volatility across home and motor policies will settle down by the second quarter, others expect it could last longer. James Dalton, director of general insurance at the Association of British Insurers, said the “once-in-a-generation” challenge for companies was that everyone was “having to do the same thing at the same time”.
The other side of the coin from Mark Andrews Insurance Director Altus Limited
"This really isn't a surprise if you work in insurance. Talk of "consumers saving £4.2B" from the removal of the loyalty penalty were just nonsense. Insurers can't just remove this income from their overall risk portfolio. "Loyal customers" (i.e. auto-renewals) can expect cheaper premiums while those who shop around (i.e. new business customers) will need to pay more."
Insurers continue to face competitive pricing pressures, low margins and motor insurers premium pricing on finance and extras under examination. Plus supply chain and raw materials price increases and logistical constraints made worse from Omicron infections impacting cost inflation and lead-times.
Add in contractors choosy on taking on repair and replacement projects ( focussing on partners and customers they can trust) and the claims handling takes on even more importance.
The combination of well lead, motivated, trained claims and supply chain management teams together with technology that delivers the optimal mix of human and digital engagement that leverages the ever increasing range of data sources available offer help to deal with these challenges.
In the New Year I will write on the platforms and technology partners that are really making a significant, positive impact for carriers, reinsurers, brokers, MGAs and, of course, for customers.
As a prequel to that I recommend that UK market insurers read this article by Mark Andrews - the December Quarterly Digital Bar Review- really good data on digital maturity across key parts of customers' insurance journeys.
That's the last post before Christmas and wish everyone a Happy Christmas and New Year and protection from Omicron and other variants.
Jason Windsor, Aviva’s chief financial officer, told the Financial Times he anticipated a “bumpy” first quarter for these segments of general insurance. Like executives at rival insurers he predicted that factors other than price, particularly customer service, would become more important.