Insurance Renewal Reminders: What Changed When the FCA Banned Price Walking

The standard advice about insurance renewals is that your insurer quietly charges loyal customers more than new ones, so you should shop around. Half of that is now wrong in the UK, and the half that survives is worth understanding properly — because the reason to set a renewal reminder has changed, even though the reminder is still worth setting.

Does your insurer still charge you more than a new customer?

Not for home or motor insurance in the UK — it is banned. The FCA's rule is one sentence long, and it is in the Handbook at ICOBS 6B.2: "A firm must not set a renewal price that is higher than the equivalent new business price."

It came into force on 1 January 2022, with firms required to implement it fully by 17 January 2022. The FCA estimated the package would save consumers £4.2 billion over ten years.

The problem it was built to fix was real and large. The regulator's market study found that in 2018, six million loyal policyholders would have saved £1.2 billion had they paid the average price for their actual risk. That is the world the familiar advice was written for. It is not the world you are renewing in today, at least not for those two products in that country.

So if you have been carrying around the belief that your own insurer is quoting you more than it would quote a stranger, you can put it down.

Then why still shop around?

Because the rule equalises one comparison and leaves three others untouched. It stops your insurer charging you more than it would charge a new customer — it says nothing about whether a different insurer would charge less.

Four things the ban does not do:

• It does not stop other insurers being cheaper. Pricing still varies enormously between firms for the same risk. The cheapest quote in the market is not obliged to come from the company you are already with.
• It does not stop your premium rising. Claims inflation, repair costs and your own circumstances all move prices. A renewal can be higher than last year and fully compliant with the rule.
• It does not cover every product. The rule applies to home and motor. Pet, travel, gadget, breakdown and other general insurance sit outside it.
• It is a UK rule. If you are insuring outside the UK, price walking may be entirely legal where you are, and the older advice applies in full.

The reframe worth making is this. Shopping around used to be about catching your insurer doing something to you. Now it is the ordinary business of checking whether a market with wildly varying prices has moved — which is a duller reason, and just as profitable.

What actually goes wrong at renewal?

Not a trick. Inertia, and a short window.

Auto-renewal means the default outcome is that you keep the policy and pay whatever the renewal notice said. Doing nothing is an active choice with a price attached, and it is the choice most people make — not because they decided to, but because the notice arrived four weeks before a date they were not thinking about, and then the date passed.

The notice itself is the thing to catch. UK renewal notices must show last year's premium alongside this year's, so the comparison you need is already printed in front of you. That document is genuinely useful and it typically arrives about three to four weeks before the renewal date — which is also, not coincidentally, about the point at which comparison quotes start to be priced attractively rather than penalised.

When should the reminder fire?

Three to four weeks before the renewal date, not the day before. That timing does two jobs at once: it lands around when the renewal notice arrives, and it leaves enough runway to get quotes, read the cover properly and switch without a scramble.

A second, shorter reminder a few days out is worth having if you are the kind of person who opens the first one, thinks "I'll do that at the weekend", and does not.

Two practical notes:

• Set it per policy, not once a year. Car, home, pet and travel renew on different dates, and a single annual prompt catches one of them and misses three.
• Anchor it to the renewal date, not the notice. The notice can be late or land in spam. The renewal date is fixed and known a year in advance.

In ReminderIt you can set one by message — "remind me on 14 March to check the car insurance renewal" — and it reads the date back before saving. A phone call suits this better than a notification for the same reason it suits any non-urgent task: nothing bad happens if you ignore it, which is exactly why a notification gets ignored.

Where this does not apply

Outside the UK, and outside home and motor. This page describes a specific regulator's rules in a specific market, and the numbers above are the FCA's own. If you are insuring a car in Ireland, Australia or the US, check what your regulator requires — loyalty pricing may be permitted, in which case the older advice to shop around every year is not just useful but urgent.

None of this is financial advice, and the cheapest quote is not automatically the right one: excess levels, cover limits and exclusions differ, and a policy that is £40 cheaper because it excludes something you need is not cheaper. What a reminder does is make sure the comparison happens while you still have the time to make it properly.

Sources: FCA Handbook, ICOBS 6B.2 Setting renewal prices; FCA policy statement PS21/5 and press material on general insurance pricing practices, including the £4.2bn ten-year savings estimate and the 2018 loyalty-penalty figures.