While the setting of premiums is ultimately a commercial decision for individual insurers, the Government is committed, through working in tandem with the Financial Conduct Authority (FCA), to ensuring that consumers are protected.

In 2020, the FCA identified the widespread use of loyalty penalties. These penalties were enacted through a mechanism called price walking, by which many firms increase prices for existing customers annually at renewal, causing millions of customers to lose out by repeatedly renewing with their current providers.

The excessive price differences in the premiums paid by some new and existing customers for identical policies were unsatisfactory and meant that many loyal customers were impacted. I therefore welcomed that on 1 January 2022, the FCA enacted new rules to prevent firms from price walking by requiring them to offer renewing customers a price that is no higher than that paid by a new customer.

While it is likely that firms will no longer offer unsustainably low-priced deals to some customers, the FCA estimates that these measures will save consumers £4.2 billion over 10 years by making the market work more effectively. I am further reassured that customers can still benefit from shopping around or negotiating with their current provider; they will not be charged more at renewal just for being an existing customer.

Premiums will continue to be calculated independently by insurers, using a wide range of factors, while regulatory changes will re-balance the premiums between new and existing customers.

I am glad that the UK has a strong regulatory framework to safeguard customers while making the insurance market work better for millions of people.