The Financial Conduct Authority (FCA) is looking into concerns about poor value products and lack of competition in the general insurance market.
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”.
In response, the FCA has issued a discussion paper in which it proposes a number of measures 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 while highlighting products that may not offer good value.
Christopher Woolard, director of strategy and competition at the FCA, said: “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.”
The FCA has also proposed three potential options for discussion:
- claims ratio as a stand-alone value measure;
- a package of claims frequencies, claims acceptance rates and average claims pay-outs;
- claims ratios and claims acceptance rates.
The FCA is asking for feedback on the discussion paper by 24 September and is also asking firms to put forward alternative options for increasing transparency and product quality in the general insurance market.
www.fca.org.uk/news/discussion-papers/dp15-04-general-insurance-add-ons