Introduction
For years, many UK insurance customers noticed a familiar pattern: staying loyal to the same insurer at renewal often cost more than switching, or even than a new customer would pay for identical cover. This practice, widely known as price walking or the loyalty penalty, was addressed directly by Financial Conduct Authority (FCA) rules that came into force on 1 January 2022.
This guide explains what the rule actually requires, what it specifically does not guarantee, and how to interpret your own renewal price in light of it. It complements our Car Insurance UK and Home Insurance UK guides, both of which are directly affected by these rules, as well as our guide to Insurance Premium Tax, another factor that can affect your premium separately from pricing practices.
Key Terms Explained
- Price Walking
- The practice of gradually increasing an existing customer's renewal price over successive years, on the basis they're statistically less likely to switch provider than a new customer.
- Loyalty Penalty
- A commonly used term for the additional cost long-standing customers were often found to be paying compared with new customers for equivalent cover.
- Equivalent New Business Price (ENBP)
- The price a firm would offer a new customer with the same risk profile as you, which your renewal price must not exceed under the FCA's rules.
- General Insurance Pricing Practices Rules
- The formal FCA rules, in force since 1 January 2022, that introduced the price walking ban along with related auto-renewal and reporting requirements.
- Risk Profile
- The combination of factors an insurer uses to price a policy, such as your claims history, location, vehicle or property type, and other relevant characteristics.
What Price Walking Actually Was
Before the ban, it was common practice across parts of the home and motor insurance market for firms to offer competitively low prices to attract new customers, then gradually increase the price at each subsequent renewal for customers who didn't switch. Over several years, this could result in long-standing customers paying significantly more than a new customer taking out an identical policy for the first time.
Why It Happened
The underlying logic relied on the fact that many customers renew automatically without comparing the market each year, whether due to time pressure, inertia, or simply trusting their existing provider. Firms could exploit this pattern by pricing renewals higher than new business, relying on relatively low switching rates among existing customers.
The Scale of the Issue
The FCA's own market study into general insurance pricing found substantial evidence of this pattern across the home and motor insurance markets, which formed the basis for the intervention that followed.
What the FCA Rule Actually Requires
The core requirement introduced from 1 January 2022 is straightforward to state, even though its practical effect is sometimes misunderstood.
Renewal Price Cannot Exceed the Equivalent New Business Price
Firms must not offer an existing customer a renewal price higher than the price they would offer a new customer with the same risk profile, for the same product, at the same time. This is the central rule underpinning the ban.
It Applies at the Point of Renewal Pricing
The comparison is made at the point the renewal price is set, based on what a new customer with an equivalent risk would genuinely be quoted at that same point in time, rather than comparing against what you personally paid in a previous year.
Firms Must Be Able to Demonstrate Compliance
Firms are required to report pricing data to the FCA and must be able to demonstrate that their renewal pricing methodology complies with the rule, giving the regulator a way to monitor the market beyond individual customer complaints alone.
Which Products Are Covered
It's important to understand exactly which insurance products these specific rules apply to, since the scope is narrower than "all insurance."
| Product | Covered by the Price Walking Ban |
|---|---|
| Home insurance (buildings and contents) | Yes |
| Motor insurance | Yes |
| Pet insurance | No |
| Private medical and health insurance | No |
| Travel insurance | Not specifically addressed by these rules |
This means that renewal pricing practices for products outside this scope, such as pet insurance, are not governed by this particular set of rules, even though other general FCA conduct requirements, such as treating customers fairly, still apply more broadly.
What the Rule Does Not Do
This is the area where consumer expectations most commonly diverge from what the rule actually delivers, and getting this distinction right matters.
It Does Not Cap How Much Your Premium Can Rise
The rule does not prevent your premium increasing from one year to the next. If the underlying cost of claims across the market rises, for example due to more expensive vehicle repairs or higher rebuild costs, both new business and renewal prices can rise together, and this is entirely consistent with the rule.
It Does Not Guarantee the Cheapest Price in the Market
Complying with the rule only means your insurer isn't charging you more than they'd charge a new customer with your risk profile. It says nothing about whether a different insurer altogether might offer you a lower price for equivalent cover, which is why comparing the market at renewal still has value.
It Does Not Apply Outside Home and Motor Insurance
As covered above, pet insurance and private medical insurance are specifically excluded, so a rising premium on these products isn't something you can assess against this particular rule.
It Does Not Mean Every Price Rise Is a Breach
A genuine change in your own circumstances, such as a claim, a new conviction, a change of address, or simply getting older or younger and moving between pricing bands, can legitimately increase your renewal price without breaching the rule, since these changes can equally affect what a new customer with your updated profile would be quoted.
What a Higher Renewal Price Does and Doesn't Tell You
Seeing your renewal price increase naturally raises the question of whether you're being treated unfairly. Here's how to think about it more precisely.
What It Doesn't Tell You
A higher renewal price, on its own, doesn't tell you whether you've been priced above the equivalent new business price, since you can't see what a new customer with your exact risk profile would be quoted by the same insurer at the same moment. It also doesn't tell you whether the rise reflects a genuine, market-wide increase in claims costs that would affect everyone, including new customers.
What It Might Reflect Instead
Reasonable, rule-compliant reasons for a higher renewal price include a claim made during the previous policy year, a change in your risk profile such as a new driver being added, broader market repricing due to increased claims costs across the industry, or simply reaching the end of an initial promotional pricing period that a genuinely new customer wouldn't have benefited from either.
The Only Reliable Way to Check
The most practical way to establish whether you're getting a competitive price is to compare quotes from other providers at renewal, rather than trying to infer compliance from your renewal notice alone, since the rule is about parity with a new customer of your own insurer specifically, not parity with the entire market.
Auto-Renewal Rules That Came Alongside It
The price walking ban was introduced together with related rules addressing how firms handle automatic renewal, which are worth understanding as a package.
Clear Disclosure of Auto-Renewal
Firms must clearly tell you whether your policy will renew automatically and explain what that means in practice, rather than leaving this buried in general terms and conditions.
Easy Cancellation
Firms must make it straightforward for you to cancel automatic renewal at any time, removing unnecessary friction that might otherwise discourage customers from opting out even when they want to shop around.
Why This Matters Alongside the Pricing Rule
Together, these measures are intended to make it easier for customers to actively engage with their renewal each year rather than passively accepting whatever price is offered, reinforcing the pricing rule's underlying goal of a fairer, more competitive renewal process.
Why You Should Still Shop Around
Given the rule only guarantees parity with your own insurer's new customer pricing, actively comparing the market at renewal remains one of the most effective ways to manage your premium.
Different Insurers Price Risk Differently
Insurers use different underwriting models and risk appetites, meaning the same risk can genuinely be priced very differently between providers, regardless of how fairly each individual insurer treats its own existing customers.
Set a Reminder Before Renewal
Comparing quotes shortly before your renewal date, rather than after the policy has already renewed, gives you the most useful window to act on what you find, whether that means switching, negotiating, or simply confirming your current price is competitive.
Use the Comparison as Leverage
If you find a lower quote elsewhere for genuinely equivalent cover, some insurers will match or improve their renewal offer if you contact them directly, though this isn't guaranteed and shouldn't be assumed as standard practice.
Worked Examples
Example: A Legitimate Market-Wide Increase
A driver's car insurance renewal rises noticeably compared with the previous year. On checking, they find that rising vehicle repair costs have pushed prices up across the market generally, including for new customers with a similar profile, meaning the increase is consistent with the rules rather than a breach.
Example: A Change in Risk Profile
A homeowner's buildings insurance renewal increases after a claim for storm damage during the previous year. The rise reflects their updated claims history, which would also affect what a new customer with an identical claims record would be quoted, so it doesn't indicate unfair treatment.
Example: Comparing the Market Confirms a Better Deal Elsewhere
A policyholder's renewal price seems reasonable on its own, but comparing quotes reveals a different insurer offering genuinely equivalent cover for noticeably less. This illustrates that a rule-compliant renewal price from one insurer doesn't mean it's the most competitive price available across the market.
Common Mistakes to Avoid
- Assuming any renewal price increase automatically breaches the price walking ban.
- Assuming the rule applies to pet or private medical insurance, when it doesn't.
- Not comparing the market at renewal, on the assumption the rule guarantees the best price.
- Overlooking that a change in your own risk profile can legitimately increase your price.
- Ignoring auto-renewal notices rather than checking cancellation options.
- Confusing the ban on price walking with a general cap on how much premiums can rise.
Common Myths
- Myth: My insurance premium can no longer go up. The rule doesn't cap price rises; it prevents being charged more than a new customer with the same risk.
- Myth: The ban covers all types of insurance. It specifically applies to home and motor insurance, not pet or private medical insurance.
- Myth: A higher renewal price proves I've been price walked. It could reflect a genuine change in risk or a market-wide increase that also affects new customers.
- Myth: Since price walking is banned, I don't need to shop around anymore. The rule guarantees parity with your own insurer's new customers, not the cheapest price across the whole market.
- Myth: These rules were only about pricing. They also introduced requirements around clear auto-renewal disclosure and easy cancellation.
Frequently Asked Questions
What is price walking in insurance?
Price walking, sometimes called the loyalty penalty, was the practice of insurers gradually increasing renewal prices for existing customers year after year, on the assumption they were less likely to shop around than new customers being offered lower introductory prices.
When did the FCA ban price walking?
The FCA's general insurance pricing rules came into force on 1 January 2022, requiring firms to stop offering existing customers a worse renewal price than an equivalent new customer with the same risk profile.
Which types of insurance does the price walking ban cover?
The rules specifically apply to home insurance and motor insurance. They do not apply to pet insurance or private medical and health insurance, which are excluded from these particular pricing rules.
Does the ban mean my renewal price can't go up?
No. The rule doesn't cap how much your premium can rise; it requires that your renewal price isn't higher than the price a new customer with your same risk profile would be offered. Prices can still rise for genuine reasons, including market-wide cost increases or a change in your own risk profile.
What is the equivalent new business price?
The equivalent new business price (ENBP) is the price an insurer would charge a new customer with the same risk characteristics as you. Under the rules, your renewal price must not exceed this figure.
If my renewal price went up, does that mean I'm being price walked?
Not necessarily. A higher renewal can reflect a genuine change in your risk profile, a claim, a conviction, or a market-wide increase in prices that also affects new customers, none of which breach the rules. Price walking specifically means being charged more than a new customer of the same risk, which isn't something you can usually confirm just by looking at your own renewal notice.
Should I still shop around even though price walking is banned?
Yes. The ban prevents you being penalised specifically for being an existing customer, but it doesn't guarantee your insurer's renewal price is the cheapest available across the whole market, so comparing quotes at renewal remains worthwhile.
What other rules came in alongside the price walking ban?
Firms must also make it clear whether a policy will auto-renew, explain the effect of auto-renewal, and make it straightforward for customers to cancel automatic renewal at any time, alongside broader requirements about how firms report pricing data to the FCA.
How much are consumers expected to save from these rules?
The FCA estimated that removing the loyalty penalty from home and motor insurance would save consumers around £4.2 billion over ten years, based on its analysis when the rules were introduced.
What can I do if I think my insurer has broken these rules?
You can raise a complaint directly with your insurer first. If you're not satisfied with their response, you can refer the complaint to the Financial Ombudsman Service, which can investigate whether the firm has acted in line with FCA rules.
References and Editorial Standards
This guide is reviewed regularly by the ShopTera Editorial Team to reflect current FCA rules on general insurance pricing practices. It is intended for general educational purposes and does not constitute regulatory or legal advice. If you believe a firm has breached these rules, you can raise this with the firm directly or the Financial Ombudsman Service.
| Version | Date | Change |
|---|---|---|
| 1.0 | 14 August 2026 | Initial publication |
Conclusion
The FCA's price walking ban has genuinely changed how home and motor insurers are allowed to price renewals, requiring parity with new customers of the same risk profile since January 2022. But it's a narrower protection than many people assume: it doesn't cap price rises, doesn't apply to every insurance product, and doesn't remove the value of comparing the market yourself. Understanding what the rule does and doesn't guarantee helps you interpret your own renewal notice more accurately, rather than assuming any increase is automatically unfair, or conversely, assuming you no longer need to shop around.
For related guidance, see our Car Insurance UK and Home Insurance UK guides, and our explainer on Insurance Premium Tax, another factor that affects your premium independently of pricing practices.