Earnix Blog > Governance and Compliance

New FCA Insurance Regulations: Complying with ‘Price Walking’

Alexander Ostrovski

15. December 2021

  • Governance and Compliance

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The UK’s Financial Conduct Authority (FCA) aims to tackle ‘Price walking’ by implementing new rules to protect consumers from loyalty penalties related to various insurance products. These new rules, which were announced in May 2021, will become official at the start of 2022 

What do the new ‘Price walking’ regulations mean for insurance companies, and ultimately, the end customer?  

These updates are likely to change the insurance industry as firms will now have to offer renewal prices that are no higher than the prices offered to new customers. The FCA estimates that it will save consumers more than £4.2 billion over the next ten yearsAs a result, many insurance companies may decide to eliminate low-priced deals for some new customers.  

The new rules must be implemented by January 1, 2022, and this means that insurance companies may need to adjust their pricing policies in order to meet the new requirements—and they must do so in a very tight timeframe.  

These new rules: 
  • Prohibit the practice of “Price walking” where existing customers pay higher renewal prices than those offered to prospects or new customers in the same channel. 
  • Make it easier for customers to cancel automatic renewals of their policies.  
  • Bolster product governance to make sure that firms deliver fair offerings to customers. 
To achieve the best results possible—while still complying with new regulations—insurance companies will need to update their pricing policies immediately and make sure new policies follow the FCA’s guidance.  

Is your business prepared? 

The FCA will require that “businesses must not set a renewal price that is higher than the equivalent of new business prices.”  

However, complying with this new change may not be as easy as it may seem, since insurers need to clearly demonstrate that the renewal prices are not higher for existing customers. It is further complicated by the fact that insurance companies can charge different renewal prices but only based on the customer’s actual risk profile. Also, if the customer’s risk went down in the previous period, the renewal prices should reflect that reduction. 

It is a new challenge and one that some insurers have only recently started to wrestle with. Yet it can present a number of real compliance questions—with potential negative consequences—if they can’t meet these new requirements. 


We predict that customer behavior will change in response to the new regulations. Canceling auto-renewal should become easier. More, this may lead to lower customer loyalty and make it harder to retain existing customers.  

For insurance companies, attempting to balance new business offers and renewal prices will make it harder to attract new customers based on premium price only. As a result, these changes will make it crucial for insurers to monitor existing models and then make needed changes to update them. 

Loyal customers will receive renewal prices consistent with the rest of the market, making them the primary beneficiaries of the new rules. But on the other hand, insurance companies that can implement the new regulation quickly and keep up with the new requirements will successfully avoid sanctions and penalties. 

Those firms that will be the first to update their overall pricing strategy to align with new customer behaviors will have a clear competitive advantage. 

What is required from insurers to respond to the new regulations? 

Clearly, insurers will need to change their pricing policies to align with the new regulations. This will most likely entail changing the models used to predict customer behavior and may even mean changing the entire approach to pricing insurance products.  

It is essential for insurers to continuously monitor all the components of their pricing strategy to ensure that the effectiveness of the models has not deteriorated, and the outcomes comply with the regulations. 

In their mission to meet the requirements of the new regulations, insurers will realize the importance of having an agile platform that allows for quick changes in pricing practices. Today, this speed can be achieved through a single, end-to-end pricing software system that is capable of managing the entire pricing process—facilitating, monitoring, updating models, deploying and maintaining internal and external reports. 


Easily set up your new pricing strategy with Earnix 

With the Earnix Price-It™ insurance pricing software and rating platform, you can use individualized pricing while keeping models blind to a customer’s particular status (e.g., new or existing) to ensure both are priced in the same way. Price-It can then identify the exact factors that satisfy your business goals. In addition, you can use the Price-It platform to quickly and easily update pricing strategies to comply with the latest requirements. 

Updating models is also easy: Earnix offers powerful model-building capabilities and works seamlessly with machine learning models developed using external tools or within Price-It itself. Every change of the overall strategy is automatically documented, making pricing governance extremely easy.  

Stay a step ahead

Insurers need to change the way they price—and quickly. One thing is clear: Those who have the right technology will have the maximum advantage. With the Price-It Platform, Earnix enables insurers to not only meet new rules and regulations quickly but with total confidence.  

Want to know more about the regulations or about Earnix? Reach out to me on LinkedIn, and I would be glad to continue the conversation. You can also contact us here 


Now's the time to make pricing changes faster and easier than before. Download the eBook.
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Alexander Ostrovski