Industry: New system allowing multiple daily rate changes unveiled by provider
Fears are mounting that the rate war is becoming even fiercer with Royal Liver's launch of a system which makes it possible to make several rate changes per day.
The web-only provider revealed that it has created a procedure which allows it to amend rates on a daily basis, a process that typically takes weeks to undertake.
The system shows a green light if the provider is either the cheapest or the second cheapest provider of a certain policy; amber if it is in third, fourth or fifth; or red if it is below sixth.
Royal Liver said its decision to roll out the system came in response to the increased number of rate changes taking place in the marketplace. However, the insurer insisted it has not yet been applied the system to 'real' rates.
Andy Milburn, IFA market manager at Royal Liver, said: "We could have made more than a thousand rate changes this year if we wanted to. However, so far we have only tested the system, and not actually made any changes yet."
He dismissed the suggestion that the company would use the system in the near future, arguing that "there is no real pressure coming from any other providers for us to use it".
That said, Milburn admitted that Royal Liver wished to remain "within the top five cheapest providers in the market", suggesting that the procedure may be applied to actual products should the price war continue.
Commenting on the system, Peter Chadborn, principal of CBK, said he is worried that other providers could follow suit. "Royal Liver has proven in many ways that it is breaking the mould and the fact that it has now launched this system suggests that other providers will do too.
"While I haven't got a problem with Royal Liver wishing to remain within the top five providers, I would be concerned if it aimed at being the top one or two providers when it comes to price because that would make the underwriting harsher.
"Therefore, I would be very worried if the likes of Norwich Union and Legal & General, which are clearly more bothered about getting market share, are going adopt it because that would just add more fuel to the rate war," he said.
