Do loyal policyholders pay more?

2022-07-08 | Reports Consumer Insurance

Finansinspektionen has analysed whether loyal policyholders pay higher premiums for the three non-life insurance products that are most important for consumers: home insurance (contents), home insurance (building) and private car insurance. The analysis shows that premiums for home insurance (contents) are raised significantly more for loyal customers than for new customers. The premiums for home insurance (building) also are raised more for loyal customers, but this does not apply to private car insurance.

The supervisory authorities in the UK and Ireland have previously observed that insurance undertakings raise their premiums more for loyal policyholders than they do for other policyholders. New rules have thus been introduced in the UK and Ireland to prevent such pricing. FI's analysis shows that price discrimination is also present on the Swedish market.

For a consumer, it is difficult to know how the undertakings set premiums and even more difficult to determine what would be an excessively high premium in relation to the inherent risk. FI takes the position that the premiums should reflect the risk posed by the insured and the insurance undertakings' estimated costs. To rectify the price discrimination, FI will maintain a dialogue with the industry as a first step.

The analysis also shows that new customers receive a discount for their insurance. The act of offering initial discounts cannot be viewed on its own as an unfair treatment of policyholders. However, FI takes the position that the discounts could be problematic if they are financed by unjustified and unfair premium increases for loyal policyholders.

FI would also like to emphasise that it is important for consumers to compare not only prices but also the terms that apply for an insurance.

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