FCA announces new measures to help prevent customer loyalty being penalized
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The Financial Conduct Authority introduces new measures to protect home and motor insurance customers from loyalty penalties.
In a move designed to protect the UK’s home and motor insurance customers, the FCA has introduced new measures to protect home and motor insurance customers from loyalty penalties.
Why were these measures introduced? In a 2018 market study, it was estimated that 6 million loyal customers who allowed their insurance policies to auto-renew spent roughly £1.2 billion more than required—money that consumers could have saved had they switched providers.
The effect of this ‘price walking’ is more severe than many consumers realise. It’s estimated that a home insurance customer who paid £130 for their first year of cover would end up paying £238 by their fifth year of cover with the same insurer.
The new set of regulations in January 2022 focused around preventing existing customers from paying more for their insurance coverage than a new customer would.
FCA Executive Director Sheldon Mills commented "These measures will put an end to the very high prices paid by many loyal customers. Consumers can still benefit from shopping around or negotiating with their current provider – but won’t be charged more at renewal just for being an existing customer."
On top of these insurance pricing reforms, the FCA also brought in new regulations to help protect consumers and bring more transparency to the often murky waters of the insurance market:
- Easier cancellations of automatic renewals
- Stricter requirements on offering customers a fair price
- Additional reporting to the FCA to allow better market supervision
While the moves are a win for UK consumers, they did spell the end of especially low 'welcome deals'. Insurers re-evaluated how they incentivised new customers to join them, and a spokesperson at the Association of British Insurers admitted it was probable that insurers would "no longer be able to offer unsustainably low-priced deals to some customers." In practice, new customer discounts did narrow after the rules came into force, though as competition has returned to the market, some attractive deals for switchers have crept back in—within the bounds of the new rules.
However, it is worth keeping in mind that while these welcome offers were often very generous, insurers eventually made their money back (and more) through gradual price increases, hoping customers wouldn't realise they could save by looking elsewhere.
One of the key drivers in the changes, a 2018 super-complaint by Citizens Advice, also pushed for changes in the markets for savings accounts, mortgages, mobile phone contracts and broadband, and noted that vulnerable sections of society, such as low-income households and the elderly, were most at risk of being a victim of annual price increases. That broader pressure has since produced results: Ofcom has introduced its own rules requiring mobile and broadband providers to notify customers when their minimum contract period ends and to offer them a better deal—a direct outcome of the same loyalty penalty campaign.
How much should I pay for my home insurance?
NimbleFins research into the costs of insuring a 3-bedroom terraced house with a rebuild cost of £200,000 put the average cost for basic home cover at £384 per year, based on data from early 2026. This reflects a significant rise from previous years, driven by inflation, higher repair and rebuild costs, and a run of costly weather events across the UK.
How much should I pay for my car insurance?
NimbleFins research put the average cost of car insurance at around £551–£559 annually, based on ABI data from late 2025. Prices have actually been falling since their peak in 2023/2024, offering some welcome relief for drivers. Note that the Ford Fiesta, previously used as a common benchmark for insurance costs, has been discontinued for new sales—the Ford Puma is now the UK's best-selling car model.
How to avoid price walking
- Don’t be afraid to shop around, even if you’re happy with your current insurance provider—receiving a lower quote from elsewhere offers leverage with your existing provider if you feel you’re being overcharged. Under the current FCA rules, your renewal price should be no higher than what a new customer would pay, but shopping around is still one of the most reliable ways to ensure you're getting a genuinely competitive deal.
- Gather quotes from multiple sources. While aggregators are a popular option, each site has a different set of insurers they partner with, so try a couple of different ones before making your decision. Keep in mind that many insurers also save their best deals for customers shopping directly, so take a look at a few websites and see what’s on offer.
- When it comes to mobile phones and broadband, providers are now required by Ofcom to alert you when your contract ends and offer you an updated deal. Don't ignore these notifications—it's a straightforward opportunity to negotiate or switch to a better tariff, and if you're no longer tied to a handset, a SIM-only deal can cut your monthly costs significantly.