Brokers and insurers working in the best interests of customers

10th July 2020

  • Brokers report a positive approach from insurers with premium capping systems in place and some dual pricing approaches ended entirely.
  • High levels of re-broking are reported as brokers work in their customers’ interests
    • 93% of respondents reporting a motor re-broking system in place.
    • 89% of respondents report a home insurance broking system in pace.
  • Awareness of GPAPS is high at around 89%.

Action by the members of BIBA (the British Insurance Brokers’ Association) and the ABI (Association of British Insurers) is benefiting long-standing customers, reveals a report published by BIBA today (10.07.20).

The two organisations launched a set of Guiding Principles and Action Points  (GPAPs) to address the occurrence of excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers in motor and home insurance, and committed to reporting back on their effectiveness.

BIBA broker members active in the home and motor insurance markets responded to a survey which revealed BIBA members to be highly engaged with GPAPs.

  • There is an 89% level of awareness of GPAPs and most brokers welcome them.
  • Brokers reported that insurers had made ‘great strides’ to bring new business and renewal pricing into line.
  • Insurers are amenable to approaches by brokers to negotiate changes to offered renewal premiums for longstanding customers on individual cases.
  • The vast majority of brokers either re-broke every year irrespective of price change or if there has been an increase in the premium (for home and motor insurance).
  • Systems brokers have adopted to implement GPAPs are often aimed at more vulnerable customers. One respondent explained how it closely monitored the premiums of those aged more than 75 years.
  • Brokers reported that system-generated renewal prices were monitored for increases and underwriters contacted about premium levels where appropriate.

Steve White BIBA CEO said: “Our members have embraced GPAPs and this is benefiting home and motor customers. In light of the success of this voluntary action by both brokers and insurers it is clear that the Financial Conduct Authority needs to note the positive impact of GPAPs.

“Brokers offer a holistic approach to their clients’ insurances considering the breadth of cover under a policy and the claims-paying history of the insurer before considering whether switching to obtain a financial saving is in the customer’s best interests. This care negates the need for auto switching which might instead cause customer harm.

“All customers are different and sometimes the safety net offered by an auto renewal process ensures continuance of motor insurance, required by law  or home buildings insurance often necessary under a mortgage and the practice should be allowed to continue albeit on an opt-in basis.”

BIBA is pleased with the findings of its review into the effectiveness of GPAPs and will continue to work with the ABI and the FCA to ensure good outcomes for long-standing customers.

Read the BIBA report here.

The ABI has also published its report today.

ENDS