End of lockdown means millions must check their insurance
Millions of people who work from home may soon have invalid insurance policies as cover for items such as laptops and phones may only be for domestic use.
As government advice changes post-lockdown, and as home working pledges made by the Association of British Insurers (ABI) are reviewed and updated on 1 September, there are likely to be disputes pitting the self-employed and homeworkers against the insurance industry.
“Some insurers aren’t being very flexible and are insisting that domestic policies don’t cover incidents if people are working from home or if they are running a business. So, if you spill tea on your laptop while writing a work email, they might say: ‘you’re not covered’.
“When lockdown was in place, it would have been harder for insurers to draw a distinction between the office and home. But now, government guidance is different, it is easier for them to do so.
“We don’t think this is right as so many people are now working from home, either because going to the office doesn’t feel safe or because they are freelancing.”
Homeworking became the norm this year, with figures from the Office for National Statistics showing nearly half of the UK’s 32 million-strong workforce worked from home during lockdown.
“There’s been a 'working from home' revolution and we all have to adapt to these new circumstances - that includes the insurance industry,” says Williams.
“We urge all Brits working from home to find out now if their policies are valid and contact their insurer if their circumstances have changed recently. Many won't know about the ABI's pledges changing on September 1st and how it may affect them, so it's worth dropping your insurer a line.
"Having something in black and white is always a good thing. However, there are a lot of grey areas right now.”
Urban Jungle has created a simple flow chart for those working from home, to help people navigate their next steps. Williams also says, for some people, additional cover may be required.
“If you are doing clerical work, mostly working on a computer, then your home insurance usually covers that. But if you run a business out of your home that is public-facing then that’s probably different. Also, online sellers won’t be able to claim for stock which is damaged, lost or stolen.”
This article was contributed by Jimmy Williams, CEO, Urban Jungle
FCA bans ‘price walking’ for insurers from Jan 2022
Insurers will no longer be allowed to raise premiums upon annual customer renewals following a new ruling by the Financial Conduct Authority (FCA)
The new move, which comes into effect in January 2022, will directly affect people renewing their home or motor insurance because they will pay no more for their premiums than a new customer.
The FCA said the change will save loyal customers an estimated £4.2bn over a 10-year-period. However, it also admitted the move could mean cheaper deals for new customers can no longer be sustainable for insurers attempting to attract business.
Price walking practices ended
According to reports, the FCA has been working on changing the rules on ‘price walking’ as it is termed, because customers are charged more their annual premiums, even though their level of risk remains the same. The system has resulted in complaints from consumer groups that loyal customers pay more unnecessarily.
"These measures will put an end to the very high prices paid by many loyal customers. Consumers can still benefit from shopping around or negotiating with their current provider, but won't be charged more at renewal just for being an existing customer."
Victory for the customer
Consumer groups have hailed the change as a victory for customers who have ended up paying higher premiums unnecessarily, but admitted it presented huge implications for insurers in the short term.
Consumer Intelligence CEO, Ian Hughes said, “These changes represent a tsunami for both insurers and their customers, but we should be in no doubt that the fault line that sits underneath this is fair value, mentioned 153 times in the final statement. GIPP changes will feel like just a ripple for those who don’t offer fair value to customers."
He continued, “This is going to be a bumpy ride for insurance brands and consumers alike in the short term. Today, the FCA has revealed that cash and cash-equivalent incentives, other than toys and carbon off setting, cannot be used to entice new customers without being offered to renewing customers. This means the savviest consumers who shop around each year will see prices rise and discounts and offers disappear.
“However, there is an opportunity for the industry to take advantage of all this change that is coming and do something that will be good for brands, good for the industry and good for consumers."
Consumer Intelligence PR and communications manager, Catherine Carey agreed, and described the victory as “a shot in the arm for innovation.”
Carey said the move “presses a giant reset button on the relationship between price and value, it will change the relationship between brands and consumers.”
She explained, “We expect to see insurers changing their models and new firms entering the market for the first time as loss-making year one pricing phases out. If you look at these new rules, and specifically the introduction of fair value, it’s the most exciting time for the development of the general insurance market for decades.”
Hughes also warned against insurers resisting the regulatory change, “Those that don’t take advantage of the opportunity are going to find it really tough.”
He added, “The tipping point we find ourselves at today is a critical point in the journey of this industry and there is an opportunity to be positive.”