The Impact of Price Walking

Toby MacLachlan, 20 January 2022

I wrote a blog in December 2020 about the potential impacts of price walking regulation that came into effect at the start of last month. I predicted a stalemate where customers would shop around less, renewal prices would be more competitive, and new business prices would be more expensive. This has not come to pass… yet.

What we have seen so far across our broker base is a great deal of change and churn. Those brokers and insurers that practiced price walking are being hit the hardest, and those which didn’t are making hay. There is a rebalancing process underway – the aggregate market prior to the new regulation being announced was relatively stable in comparison to this month. That is all changed as companies grapple with questions such as whether to prioritise renewals or new business, and how much of a fee they can reasonably charge.

To give an idea of the scale of the flux: two brokers using the Ignite policy admin platform that didn’t historically price walk have seen new business grow 135% and 181% beyond last month, and this was only by the 20th January…. Meanwhile, another broker budgeted to write 1,100 new business and had only managed 200.

It is worth mentioning that the new legislation also heavily favours newer high-growth businesses that can afford to prioritise new business over the more lucrative renewals and build market share. Ignite powers a number of these so our stats may be skewed.

One thing has changed already: the ‘crazy’ pricing (as one top-50 broker put it to me) that plagued the market in the second half of last year (in reference to heavy negative commissions and a land grab before the regulations hit) has at least calmed down.

So, a new prediction for the future: there will be churn for the next 3-4 months, then it will calm again, but watch out for more action in Jan-23 as all these new business cases come up for renewal! Opportunities abound…

Get in touch to organise a free, no-obligation demo.

Request a demo
© 2024 Ignite. All rights reserved.