Insurance pricing rules: the ban on price walking

For years, the standard way to buy home or motor insurance was to switch at every renewal, because insurers offered their sharpest prices to new customers and loaded the cost onto those who stayed. That practice, known as price walking, meant loyal customers could pay more year after year for exactly the same cover. The Financial Conduct Authority's pricing rules were brought in to stop it: a firm must not charge a renewing customer more than an equivalent new customer would pay through the same channel.

The rules matter because they change what a renewal quote means. A renewal price is no longer a loyalty penalty by design, but it is still not guaranteed to be the lowest price on the market, and it is not capped. Insurers remain free to set their own prices, to change them year to year, and to charge more where the risk has changed. What they cannot do is charge you more than a comparable new customer simply because you stayed.

This page explains what the pricing rules cover and what they leave out, the selling standards that sit behind them, what happens when you pay monthly rather than annually, how Flood Re affects home insurance prices in flood risk areas, and what to do if a renewal price looks wrong. The complaint route is fixed: complain to the insurer first, and if there is no final response within eight weeks, take it to the Financial Ombudsman Service¹.

What the price walking ban means for your renewal price

The core of the price walking ban is a comparison the insurer must make internally: the price offered to you at renewal must be no higher than the price an equivalent new customer would pay for the same product through the same sales channel. If a firm advertises a cheaper price to new customers on its website, that is the benchmark your renewal must match. The rule does not stop a firm charging different prices through different channels, for example through a broker and direct, and it does not stop prices rising for reasons connected to the risk, such as a claim, a change of address or a change in the wider market.

The rules sit alongside a wider duty on firms to make sure their products actually suit the people they are sold to. Under the FCA's Product Governance rules, where an existing product does not meet the needs of its target market, a firm must "cease any renewals for existing retail customers, provided that existing retail customers are easily able to move to an alternative product that provides at least the same level of benefit at an equivalent cost to the customer"¹. In practice this means a firm cannot keep rolling over a product it knows is poor value, unless switching away is genuinely easy.

What the ban does not do is freeze your premium. Your renewal can still go up, sometimes sharply, because of your claims history, the excess you choose, the Insurance Premium Tax embedded in the price, or simply because the insurer has repriced its book. The protection is against a penalty for loyalty, not against price rises in general. If your renewal has jumped, the first check is whether anything about you or the policy has changed, and the second is what the same cover costs elsewhere.

Shopping around remains worthwhile, and the rules have not changed that. New customer incentives still exist across financial services, but they come with conditions. In one ombudsman case study, a customer who switched current accounts did not qualify for a £175 payment because she had not met all the terms of the offer⁶. The same principle applies to insurance switching offers: read the conditions before assuming a headline incentive is yours. The pages on insurance renewals and automatic renewal and how insurance premiums are worked out cover the mechanics in more detail.

Home and motor insurance: who the pricing rules protect

The pricing rules were aimed at the markets where price walking was most entrenched: private motor insurance and home insurance, buildings and contents. These are mass market products bought annually, where switching is easy in principle but where many customers, particularly older ones or those who had been with the same insurer for years, simply renewed without checking.

The scope matters because the rules are not universal across insurance. A review by the Prudential Regulation Authority of policyholder protection identified a list of general insurance areas where it was concerned protection may be inappropriate, including "Insurance Backed Guarantees (IBGs), home insurance (buildings and contents), motor insurance (excluding third party), private health insurance, travel insurance, public liability insurance (PLI)"⁷. That list is a reminder that general insurance is a broad church: the pricing rules that bite on your car or home renewal do not extend in the same way to every policy a consumer buys, and protection if an insurer fails varies by product too, as the page on what happens if your insurer goes bust explains.

Within home and motor, the rules protect the customer relationship rather than the price level. A firm can still decline to offer renewal, can still price according to risk, and can still charge more to customers who present a greater risk. What it cannot do is run a pricing structure in which the price rises each year purely because the customer is judged less likely to leave. If you have stayed with the same insurer for many years, the practical effect of the rules is that your renewal quote should now be broadly the price a new customer would pay, rather than a ratcheted version of it.

Selling standards: fair, clear and not misleading

Behind the pricing rules sits a web of selling standards that apply to how any price is presented to you. The FCA's rulebook states the standard plainly: "A lender must communicate information to consumers in a way which is clear, fair and not misleading"⁸. The same principle governs insurance sales, and it means the price, the cover and the exclusions must be presented so an ordinary reader can understand what they are buying and what it costs.

Consumer law reinforces this from outside the regulatory rulebook. The Consumer Rights Act 2015 requires that "a trader must ensure that a written term of a consumer contract, or a consumer notice in writing, is transparent"⁹. The Price Marking Order requires that the selling price and unit price are "unambiguous, easily identifiable, and clearly legible"¹⁰. Where you buy online, distance selling rules require any trading website to indicate clearly, at the latest at the beginning of the ordering process, whether delivery restrictions apply and which means of payment are accepted¹¹.

Some selling practices are banned outright. The Digital Markets, Competition and Consumers Act 2024 makes it a banned practice to make "an invitation to purchase products at a specified price where the trader believes it will not be possible to supply at that price in reasonable quantities for a reasonable period, without disclosing that fact"¹², the classic bait pricing tactic. It also bans explicitly telling a consumer that if they do not buy, the trader's job or livelihood will be at risk¹², a pressure line sometimes used in telesales.

There is a remedy if an online order goes wrong at the button. If a trader has not complied with the acknowledgement and button labelling requirements for distance contracts concluded by electronic means, "the consumer is not bound by the contract or order"¹¹. For insurance specifically, the practical use of these standards is at renewal: if a quote is presented in a way that hides a compulsory excess, an add-on sold by opt-out, or a price that was never really available, that is a selling standards problem you can complain about, not just a price you have to accept.

Paying monthly: the cost of premium finance

Most insurers let you pay your premium monthly, but monthly payment is usually a form of credit: the insurer or a finance partner lends you the annual premium and you repay it with interest over the year. The pricing rules govern the premium itself, not the cost of that credit, so two customers quoted the same annual price can pay materially different totals depending on how they pay.

The regulator expects firms to make the cost of this finance clear, and the ombudsman has built up an approach to what a fair outcome looks like when the cost of paying monthly was not properly explained, developed through its work on payment protection insurance. The regulator's guidance indicates that an alternative regular-premium policy would have cost £9 per £100 of benefit¹³, a benchmark the ombudsman uses when working out what a customer should have paid. Where a policy was mis-sold, the ombudsman's approach is to put the customer back in the position they would have been in: in one worked example, total compensation of £2,463.13, made up of £1,990.90 in premiums plus £472.23¹⁴.

Separately, consumer law limits what can be charged simply for choosing a payment method. Under the Consumer Rights (Payment Surcharges) Regulations 2012, "traders are banned from imposing surcharges on consumers for using certain payment methods"¹⁵. Where a fee is charged in breach of the rules, the contract is treated as providing for the fee to be repaid¹⁶. That applies to surcharges for using a card, not to the interest charged on a credit agreement, but it is worth knowing the difference: a charge for paying by debit card is one thing, the finance cost of monthly instalments another.

The practical point for a renewal is to look at both figures: the annual premium and the total of the monthly instalments. The gap between them is the cost of the credit. The page on paying monthly for insurance covers how instalment plans work, and the page on the poverty premium covers why paying monthly often costs more overall.

Flood Re and home insurance prices

Pricing rules are not the only government-backed intervention in home insurance prices. Flood Re, introduced in 2016, exists to "enable householders in areas of high risk of flooding to get adequate cover at a 'reasonable' price"¹⁷. It is described as "a commitment by the industry to offer insurance in high risk areas at affordable prices"¹⁸, and almost 250,000 households have benefited, with four out of five properties that previously submitted claims for flood damage now able to get cover⁴.

The scheme works behind the scenes of an ordinary policy. Flood Re is "a re-insurance scheme (hence the 'Re') in which insurers can pool the costs associated with higher-risk properties by paying a levy into a non-profit-making fund"¹⁹. You buy buildings or contents insurance from a normal insurer; the insurer can then pass the flood part of the risk to Flood Re. Without it, the position was stark: before the scheme, "just over half of these flood-claim homes would have paid thousands of pounds, while the remainder would have been unable to obtain insurance altogether"²⁰.

Flood Re does not make flood risk homes cheap. Quoted prices in high-flood-risk areas are 50-55% higher than in lower-risk areas²⁰, so the scheme moderates the penalty rather than removing it. There are exclusions to know about: the scheme generally excludes properties built since 2009⁴, and it "does not cover buildings insurance for a block of more than three leasehold flats"¹⁷, which matters for leaseholders in flats, covered on the page about buildings insurance for leasehold flats.

The scheme is time limited. Flood Re is due to end in 2039, "at which point the intention is to return to a market-based system that reflects risk"⁴. Concerns have been raised about what follows: as most mortgages now outlast the lifetime of Flood Re, the National Flood Forum is reported as not seeing evidence that the market will pick up the provision after the scheme ends²⁰. Flood Re's strategy is that premiums and payments should encourage householders to make their properties more flood resilient¹⁹, which is where schemes such as Build Back Better come in. The full detail is on the Flood Re page.

Customers in vulnerable circumstances

The pricing rules assume a customer who can read a renewal notice, compare prices and switch. Regulators recognise that many customers cannot do all of that easily, and the law adjusts the standard of protection accordingly. Under the Digital Markets, Competition and Consumers Act 2024, where a group of consumers is particularly vulnerable to a practice in a way a trader could reasonably be expected to foresee, the average consumer is read as an average member of that group, and vulnerability may result from "their age; their physical or mental health; their credulity or the circumstances"²¹.

In payments regulation, the same thinking produces concrete rules: the standard of caution exception, which lets firms treat certain transactions more leniently, "does not apply to customers identified as vulnerable"²². In consumer credit, FCA guidance states a firm should have regard to information indicating a customer "is in, has recently experienced, or is likely to experience, financial difficulties, or is vulnerable, for example because the customer has mental health difficulties or mental capacity limitations"²³.

Vulnerability is not an abstract label; firms are expected to record and act on it. In one ombudsman case study, "the business had noted in its records that Emma was a vulnerable customer"²⁴, and the complaint turned on whether the business had acted on what it knew. Access is part of the same picture: guidelines for utility companies, which set a benchmark other sectors follow, expect firms to "have systems in place so that customers who use British Sign Language, or do not speak English or Welsh, can communicate with the company"²⁵.

For insurance customers, the practical relevance is at renewal. A customer who finds it hard to compare quotes, to use a comparison website, or to phone a call centre is exactly the customer the pricing rules were designed to protect, because price walking relied on customers not switching. If you or someone you know struggles with renewals, firms are expected to make reasonable adjustments, covered on the page about reasonable adjustments and accessible documents, and free debt and money help is available through MoneyHelper and the debt advice charities listed in our debt guide.

The FCA's role and what it cannot do for you

The Financial Conduct Authority writes and enforces the pricing rules, and its position in the system is deliberately limited. Parliament's intention, expressed in briefings on the regulatory framework, is that "the FCA, not Parliament, should be responsible for setting rules governing the sector, as far as is practical"²⁶. One of its responsibilities is ensuring fair practice in consumer credit²⁷, and it is also the go-to contact if you want to check whether a firm is legitimate or report a possible scam²⁷, which includes the ghost broking scams that sell fake motor policies at prices that look too good to be true.

What the FCA cannot do is decide your individual dispute or pay you money. It "cannot pay compensation or order a claims management company to compensate you, even if you've received poor service"²⁸, and the same limitation applies to insurance complaints. As a regulator and an unfair contract terms enforcer, the FCA "does not have the power to grant redress to consumers who have suffered loss because a term or notice is unfair and/or insufficiently transparent"²⁹. Individual redress is the ombudsman's job.

The FCA does have collective powers, and they are worth knowing about because they have produced mass payouts in the past. It can apply to court for restitution, or require restitution, where an unfair term also amounts to a rule breach causing loss to consumers²⁹. It can use section 404 of the Financial Services and Markets Act to make rules requiring authorised firms to establish and operate consumer redress schemes, and it can impose a similar requirement on an individual firm²⁹. It is also a designated public enforcer under the Digital Markets, Competition and Consumers Act, allowing it to seek court orders which may include redress for breaches of consumer protection legislation²⁹. These are powers used across a market, not a complaints service for one customer.

Before you buy, you can check who you are dealing with. The FSCS advises two steps: "Check your provider is authorised by the Financial Conduct Authority (FCA)", then "Find out if the particular activity that the authorised firm is carrying out for you is regulated by the Prudential Regulation Authority (PRA) or the FCA"³⁰. Both matter, because protection if a firm fails depends on what it was doing for you, as the page on insurer failure and FSCS protection explains.

Complaining about an insurance renewal price: eight weeks, then the ombudsman

If a renewal price looks wrong, whether because it seems to breach the pricing rules, because the selling was unclear, or because the monthly finance cost was never explained, the route is the same.

1. Complain to the insurer first. Set out in writing what looks wrong: the renewal price, what you were told, and what you think should have happened. The firm should get back to you within 15 days, either with a response or to explain why it cannot yet give one, and send a final response within 35 days².
2. Wait for the final response, or eight weeks. If the insurer sends no final response within eight weeks, or you are unhappy with the response you get, you can bring the complaint to the Financial Ombudsman Service³¹. The eight-week deadline is the firm's outer limit for most complaints, and the ombudsman's own guidance for firms on complaints such as underinsurance repeats it: reply to the consumer within eight weeks³².
3. Take it to the ombudsman. The service is free and independent. It looks at the facts and can award money, including compensation for distress and inconvenience, covered on the distress and inconvenience page.

The ombudsman's award limits depend on when the complaint is referred and when the events occurred: £200,000 for complaints referred on or after 1 April 2025 about acts or omissions that occurred before 1 April 2019; £170,000 for complaints referred between 1 April 2022 and 31 March 2023 about acts before 1 April 2019; £160,000 for complaints referred between 1 April 2019 and 31 March 2022 about acts before 1 April 2019; and £350,000 for complaints referred between 1 April 2019 and 31 March 2020 about acts on or after 1 April 2019³. A renewal price dispute will sit far below any of these limits, but they set the ceiling on what the ombudsman can require a firm to pay.

Two other contacts are worth knowing. The Citizens Advice Consumer Service runs a helpline on 0808 223 1133, Monday to Friday, 9am to 5pm⁵, for general consumer problems. And if you are minded to use a claims management company, be aware that they charge a fee for help you can get free: complaining to the insurer and then to the ombudsman costs nothing. The scale of insurance complaints is visible in the ombudsman's quarterly data, which for one quarter showed 277 complaints opened about mobile phone insurance, 402 about commercial property insurance and 85 about business protection insurance³⁴. The full complaint route, including what the ombudsman can and cannot look at, is on the complaining about an insurer page, and response times are covered in detail at how long an insurer has to respond.