UK insurer Admiral has been caught out by the Financial Conduct Authority for providing inaccurate premium amounts in renewal documents sent to some customers.
New rules introduced by the FCA require firms to clearly show the insurance premium a customer paid last year alongside their proposed renewal premium.
The FCA found that Admiral had published last year’s quoted premium before discounts were applied, rather than what the customer actually paid.
Jonathan Davidson, Executive Director of Supervision - Retail and Authorisations at the FCA, said: “It is vital that insurers give customers the right information so they can easily compare premiums and make a choice whether to shop around.
“When introducing these measures, the FCA was clear that firms should be ready from April 2017. We will continue to keep a close eye on the industry’s response to ensure firms are complying with the new rules and will take action where necessary.”
Admiral has agreed to contact affected customers and to let them cancel without penalty if they want to.
It said: “We apologise for any confusion or inconvenience caused to customers who received an inaccurate renewal document. We are amending the way in which these customers are able to compare the price of the insurance policy being offered at renewal with what they paid the previous year . . . Admiral is committed to offering fair and transparent pricing to all customers.”
In trials, the FCA found that putting last year’s premium on renewal notices caused 11% to 18% more people to switch or renegotiate their home insurance.
However, the industry is going through a tough period because of a sharp increase in the size of compensation payments to people with serious injuries. According to recent data released by EY, the changes, announced by the government earlier this year, will cost motor insurers £3.5bn.
Premiums have already increased in response. Motor insurance premiums hit a record high earlier this year, according to the Association of British Insurers.