Personal view:
This is hardly a scandal. It's a standard business approach of using a loss leader or just a cheaper price to get new business used in every industry. Why would any new customer change business if they don't get a cheaper price? This is basic behavioural economics.
Each year, the policyholder can change their insurance to another company that charges less, they are not under any obligation to continue with the existing company. And it's never been easier to compare and change insurance companies using online aggregators/price comparison sites.
In addition, insurers are required to publish the price their customer paid last year - so the customer is fully informed.
I personally don't think that any such compensation demand would not make it through court.
Thanks for the response.
I think you are taking an interesting position but one which I think you are likely to find uncomfortable to defend.
Basically you are saying "insurance is just like any other business, just like say mobile phone contracts".
Except that it isn't: other businesses don't have "Treating Customers Fairly" rules, don't have highly paid members of a profession (actuaries) with a duty to "act in the public interest" , and to "speak up" if unethical practices occur.
If insurance really is just the same as any other business, why do actuaries need to be members of a profession, with a code of ethics? Is the IFoA's Royal Charter still necessary/useful?
Are actuaries just there to make sure that insurance companies never go bust, i.e. never
undercharge? Doesn't a public interest duty, a "treating customers fairly" duty imply that actuaries have a responsibility to stop insurers
overcharging too?
You say "the customer is fully informed": no, s/he is not: while they have been reminded what they paid last year, they have not been told what a new customer would be charged.
Are you really saying that no harm has been done? If so, you are contradicting both the FCA, and the IFoA Immediate Past President. Both have admitted that "harm" was occurring in the industry. The Consumers Association has accused insurers of "sharp pricing tactics" and of imposing "eye watering price increases" on loyal customers.
I look forward to your reply!