The regulator’s Renewal Transparency rules require insurance brokers, along with insurance providers, to mention at each renewal, that a retail customer (but not a commercial client) may want to look for cover with an alternative provider.
On the fourth and any subsequent renewal period clients should be actively encouraged to shop around.
The change comes into force on 1 April and is in addition to the rule that at each renewal, retail customers must be provided with the previous year’s equivalent annual premium in order that they can more easily identify any price rise.
Mortgage brokers who are also active in the general insurance market are likely to be most affected with this move.
Berkeley Alexander managing director Geoff Hall noted that brokers should check if providers would be updating their paperwork to include the previous premium.
“There is a risk that clients, encouraged to shop around, will look elsewhere and this underlines the importance of having a large panel of providers and products available and staying in touch with clients at renewal,” he said.
“Some single product providers may well have restricted means of helping customers to switch, especially where the client’s circumstances have changed. Retaining the client is the main concern, and choice will help advisers to do that,” he added.