By Huw Jones
LONDON (Reuters) - British insurer Direct Line has agreed to review overcharging of existing home and motor customers totalling about 30 million pounds ($38 million) for policy renewals, the Financial Conduct Authority (FCA) said on Friday.
Direct Line Group will be contacting affected customers directly in what is the first time a formal requirement has been agreed with an insurer regarding the watchdog's motor and home insurance pricing rules, the FCA said.
"Direct Line Group will carry out a review to identify all instances where a customer has been overcharged and provide appropriate redress," the FCA said in a statement.
Under the rules existing customers should not be charged more than if they were a new customer, aiming to stop companies exploiting customer inertia.
Direct Line said in a statement that an error in its implementation of those rules has meant that its calculation of the equivalent new business price for some customers failed to comply with the regulation.
"As a result, those customers have paid a renewal price higher than they should have," Direct Line said.
"The current estimate of these payments is in the region of 30 million pounds of which half was provided for within the Group's 2022 full-year results," the company said.
Friday's announcement is unconnected to the announcement made in June in relation to the past business review of motor total loss claims, the company added.
Earlier this week, Direct Line named a new CEO as it seeks to reset after profit fell by 95% in 2022.
The company reports first-half 2023 results on Sept. 7.
($1 = 0.7900 pounds)