Financial watchdog may have finally brought insurers to heel | Business


When it first looked at insurers’ price-raising tactics a few years ago, the Financial Conduct Authority came up with the fun idea of ​​getting the whole British population to renew or change their policies auto and home insurance on the same day each year.It worked well in Hungary, apparently. A one-day frenzy meant that companies had fewer opportunities to attack the lazy and reckless. When customers paid attention, the best prices followed.

Unfortunately but inevitably, the financial regulator did not choose Hungarian pleasure. The FCA offers a different solution: an effective ban on “price walking”, the practice of hooking a customer with a teaser price and then slipping into sly price increases year after year. If the proposals are implemented in the second half of next year, anyone renewing their policy should be charged the same price as a new customer.

There is something odd about a regulator actually banning introductory offers, which is common practice in many industries. On this occasion, however, it is quite justified. The insurance industry has turned a marketing gimmick into a complete business model that seeks to punish loyalty. And the situation has worsened with customer profiling techniques denying the best rates to those who may be bothered to shop.

In the retail energy market, the solution to a similar problem was price caps on default tariffs. Insurers should consider themselves lucky to have avoided this fate. In fact, they should be thankful: the teaser treadmill is expensive to maintain.

The FCA assumes that savings in the cost of acquiring business customers will be passed on to consumers, and this is how they arrive at their estimate that bettors, as a whole, will be better off by $ 3.7 billion. of pounds sterling over a decade. Let’s see if these savings are actually returned to customers in terms of price; insurers can be inventive. But the FCA is always right to act: honest pricing is better.

A DIY job well done at Kingfisher

Kingfisher is sending £ 23million in leave money to the Treasury because he is too embarrassed to keep it. The owner of B&Q and Screwfix is ​​enjoying his best sales figures in years as “people rediscover their homes and find pleasure in improving them,” as CEO Thierry Garnier puts it. Office workers stuck at home have turned DIY and gardening into booming markets.

The 16.6% like-for-like sales growth, as Kingfisher has seen since the start of August, cannot last forever but the pace should be enough to kill any lingering discussion about breaking up a pan-European group which also includes Castoroma and Brico Dépôt En France.

In fact, Garnier had probably already succeeded on this front. By abandoning the tired mantra of “unification” of his predecessor, he has restored investor confidence. Chains now have more freedom to tailor their offerings to local markets, which sounds like a common sense act.

A new system of one-to-one share sharing for staff is also worth mentioning. There is a cap of £ 1,500, so the money will never change your life, but it signals a new strategy. Other companies may copy it for different reasons. Many store workers still in service have lost income due to time off and forced part-time hours; a low risk stock bonus system is a cheap catch-up mechanism.

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Premier Inn finds no room to maneuver

In contrast, Whitbread’s response at the end of next month’s leave program is to make up to 6,000 laid-off employees, mostly housekeepers and receptionists. At most, this would represent around 18% of its total workforce.

In the absence of a Treasury replacement plan, the movement is unfortunately predictable. Even in August, the strongest month since the blocking of the group’s Premier Inn chain, hotels were only 51% full on average, compared to 80% in a normal year.

Attempting to keep the investor spirit alive, Managing Director Alison Brittain spoke of a strong balance sheet (bolstered by a £ 1bn rights issue) and “strengthened structural opportunities in the medium to long term”. The latter mainly means chances of seizing properties at lower prices in Germany, the great hope of a replica of the Premier Inn business.

Yes, if you look on the horizon, that makes sense. The short term, however, depends on Chancellor Rishi Sunak’s generosity – or not – to extend VAT holidays and business rates and other support mechanisms for the hospitality industry. It’s not much to hold onto.


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