In July 2014 an FCA market study showed that competition in the general insurance add-ons market was not working well for many consumers and they were paying too much for some products that offered poor value. The discussion paper proposes a number of measures that could be published by the FCA to improve transparency and increase value across the entire general insurance market.
The FCA believes that publishing value information will incentivise firms to increase competition whilst highlighting products that may not offer good value.
Christopher Woolard, director of strategy and competition at the FCA, said:
“We are committed to introducing a measure of value for general insurance products. We believe consumers in this market need to have greater transparency about what they are paying for.
“We believe the options set out in the paper will boost competition between firms to offer the best deal for consumers.”
Earlier this month the FCA published new rules to address issues in the Guaranteed Asset Protection (GAP) insurance market and in March 2015, proposed a ban on pre-ticked boxes and opt-out selling. The FCA is now inviting industry to put forward ideas for remedies that will give consumers an indication of the value of general insurance products. The FCA has also proposed three potential options for discussion:
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claims ratio as a stand-alone value measure;
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a package of claims frequencies, claims acceptance rates and average claims pay-outs;
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claims ratios and claims acceptance rates.
The FCA is asking for feedback on the discussion paper by 24 September 2015 and is also asking firms to put forward alternative options for increasing transparency and product quality in the general insurance market.
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