Annual home insurance premiums for traditional "postal-only" policyholders – primarily elderly homeowners who manage their policies offline via post and phone – will face new renewal-matching regulations. The Financial Conduct Authority (FCA) accused major insurers of exploiting "inertia-locked" consumers. This intervention is projected to save 2.4 million policyholders an average of £115 annually.
The FCA intervened because premiums for these offline home-insurance customers – of whom over 45% are classified as digitally excluded or vulnerable – have risen by nearly 40% over the last five years. This occurred despite a 15% reduction in average payout costs for standard claims across the industry. Many of these customers have remained with "Heritage Shield Assurance" for over twenty years. The FCA focused its investigation on Heritage Shield because it controls 55% of the UK’s 4.3 million offline home insurance policies.
An FCA spokesperson commented, "Heritage Shield's dominant legacy footprint has enabled it to raise renewal premiums consistently without experiencing any significant customer loss, while competitors have followed similar upward pricing trends. We expect these new regulations to disrupt this behavior." The FCA's research revealed that 75% of Heritage Shield's postal-only policyholders have never used a comparison website or sought alternative quotes, leaving them exposed to high renewal premiums.
With reference to Extract C, assess possible reasons why many 'offline' home insurance policyholders do not switch to a cheaper insurance provider.
