A rule requiring an insurer to offer a renewing customer the price it would quote a new equivalent customer, ending the loyalty penalty.
Price walking means winning a customer with an introductory rate then raising the premium year after year, exploiting the fact that inertia outweighs price sensitivity among customers who do not shop around. The practice was individually rational and collectively costly, since it shifted the burden from mobile customers to older ones, uncomfortable with online comparison or simply loyal, what regulators called the loyalty penalty. The remedy chosen was not to cap increases but to impose equal treatment: the renewal price offered to an existing customer may not exceed what would be offered to that same customer arriving new through the channel by which they were insured. The rule is elegant because it leaves the insurer free to set its price level while forbidding discrimination by tenure. Its measured effect matches the theory, with prices falling for loyal customers and introductory rates rising, a transfer regulators had accepted in advance.
The United Kingdom Financial Conduct Authority banned price walking in motor and home insurance from 1 January 2022, following a market study that had put the extra cost borne by loyal customers at several billion pounds a year.
price walking, remontée tarifaire, pénalité de fidélité, loyalty penalty