On 8 May 2018, the Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) published a set of guiding principles and action points with the aim of addressing some of the issues in the current market that can lead to excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.

The guiding principles and action points apply to personal lines general insurance products with contract terms of ten months or longer, except pet and private health insurance products, where different market conditions mean they are not applicable.

Action points include the following:

  • ABI and BIBA members should make clear in written, online or verbal customer communications that the new customer premium only applies for that year and subsequent renewal premiums may be higher;
  • ABI and BIBA members who impact the final premium paid by customers should review their pricing approach for customers who have been with them longer than five years and assess whether this approach delivers a fair outcome;
  • ABI members will actively review their customers' tendency to shop around in line with the existing ABI and BIBA code for potentially vulnerable customers at renewal, to ensure outcomes for these customers are carefully considered against the guiding principles;

the ABI and BIBA will publish a report, in no more than two years' time, which will demonstrate how ABI and BIBA members have sought to tackle excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.