The UK's Financial Conduct Authority is to tackle the problem of insurance companies raising the premium paid by loyal policyholders by changing the rules that govern disclosures.

The regulator is proposing to draw up rules to require firms to disclose last year’s premium on renewal notices; rules that require additional disclosure when customers have renewed the same product four times or more; guidelines to govern the ways in which firms can improve their renewal processes; and guidelines to govern records that firms maintain to demonstrate compliance, including a record of premiums.

Last year the regulator launched a large-scale, randomised research project with more than 300,000 customers from one home insurance and two motor insurance providers to find out whether better disclosure of various things can help consumers concentrate on their best interests when renewing policies. They also used information about approaches to renewal pricing from a sample of three firms. They tested four types of disclosure and concluded that the simple act of putting last year’s premium on renewal notices had the most beneficial effect on 'consumer engagement,' as they call it, although this was less effective for consumers who did not have large year-on-year price increases. Research indicates that these consumers are more likely to have been with the same provider for more than five consecutive years on average.

On this last point about last year's premium the paper, CP15/41, contains a rather odd exhortation in note 2.2: "We expect firms to take account of our discussion paper, DP15/5: Smarter Consumer Communications, when they implement the final proposal." Quite why the FCA should entertain any 'expectation' that someone will want to perform a voluntary, non-compulsory act of this nature, it does not say.