General Insurance Article - Impact of FCA new pricing rules introduced 1 January 2022

Bethan Faultless, Head of UK Personal Lines Pricing, Willis Towers Watson comments on the impact of the FCA new pricing rules introduced 1 January 2022

 “The significant volatility widely anticipated for average premium changes in the immediate days following the introduction of the FCA new pricing rules for home and motor insurance on 1 January has yet to materialise. While Motor prices have so far remained relatively stable throughout the first few days of January.

 “This stability is likely to be short-lived, however, making way for increased volatility in premiums once insurers have returned from the Christmas break. How insurers react or over-react to the new rules through price changes and product differentiation will be decisive in determining just how bumpy the upcoming weeks and months become.

 “Most of this turbulence will manifest over the next three months, although ongoing uncertainty is expected to endure throughout 2021 before settling towards the end of the year. Meanwhile, the COVID-19 pandemic will continue to put insurers under considerable pricing pressure as wholesale society changes evolve and disrupt the market, compounded by inflationary pressures already being observed on claim amounts.”

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