The Financial Conduct Authority (FCA) has published its first set of data on insurers’ claim rates and average payouts, designed to encourage firms to improve the value of their products.
The data covers claims over the year to 31 August 2016 on building and contents insurance, home emergency, personal accident and key cover policies sold by 38 insurers, which include both UK firms and European Economic Area (EEA) firms. The FCA intends to publish another year’s worth of data as part of a pilot programme, and will then consider whether to extend the pilot for a further year before consulting on a more permanent scheme.
Christopher Woolard, the FCA’s executive director of strategy and competition, said that the data would “help incentivise firms to improve the value they offer consumers”.
“We want stakeholders to have access to a wide range of information about the value of general insurance products that goes beyond price,” he said.
In its 2014 market study on general insurance add-ons, the FCA found that too many consumers were purchasing poor value, unnecessary products. It subsequently consulted on three potential methods for calculating the relative value of these products, in order to encourage competition between firms.
The FCA also banned the use of pre-ticked boxes and opt-out selling of add-on products in response to the same study, as well as introducing new rules specific to motor vehicle guaranteed asset protection (GAP) insurance sales.
The published data includes three measures of value. The claims frequency figure, published as a percentage, shows the proportion of policyholders with that insurer that actually registered a claim during the data period. Acceptance rate shows the percentage of those claims that are actually accepted by the insurer, while average claims pay-out shows the amount actually paid out, including internal and relevant external costs.
“The data published by the FCA will certainly attract headlines and may affect consumers’ buying decisions,” said financial services expert Alexis Roberts of Pinsent Masons, the law firm behind Out-Law.com.
“In some respects, though, these measures are a fairly blunt tool, as they will not reflect differences in the business profiles of the insurers, which may lead to legitimate differences in the percentage of claims that are accepted,” he said.
The data is intended for use by consumer groups and market commentators rather than individual consumers, although the FCA also expects that it will incentivise firms to improve the value of their products.
Christopher Woolard, the FCA’s executive director of strategy and competition, said that the data would “help incentivise firms to improve the value they offer consumers”.
“We want stakeholders to have access to a wide range of information about the value of general insurance products that goes beyond price,” he said.
In its 2014 market study on general insurance add-ons, the FCA found that too many consumers were purchasing poor value, unnecessary products. It subsequently consulted on three potential methods for calculating the relative value of these products, in order to encourage competition between firms.
The FCA also banned the use of pre-ticked boxes and opt-out selling of add-on products in response to the same study, as well as introducing new rules specific to motor vehicle guaranteed asset protection (GAP) insurance sales.
The published data includes three measures of value. The claims frequency figure, published as a percentage, shows the proportion of policyholders with that insurer that actually registered a claim during the data period. Acceptance rate shows the percentage of those claims that are actually accepted by the insurer, while average claims pay-out shows the amount actually paid out, including internal and relevant external costs.
“The data published by the FCA will certainly attract headlines and may affect consumers’ buying decisions,” said financial services expert Alexis Roberts of Pinsent Masons, the law firm behind Out-Law.com.
“In some respects, though, these measures are a fairly blunt tool, as they will not reflect differences in the business profiles of the insurers, which may lead to legitimate differences in the percentage of claims that are accepted,” he said.
The data is intended for use by consumer groups and market commentators rather than individual consumers, although the FCA also expects that it will incentivise firms to improve the value of their products.
this article is care of Pinsent Mason, at outlaw.com the orginal article can be found here.
