On 30 January the Petitions Committee considered e-petitions that
had received over 10,000 signatures and received a Government
response, and public petitions that had received a Government
observation.
The committee "noted the response" to the following petition:
Petition title:
Establish a Commission to investigate extortionate Car Insurance
price rises
Petition text:
Car insurance prices have become increasingly more expensive
since the Coronavirus pandemic, surpassing pre-pandemic average
costs to insure cars despite a general reduction of road related
deaths. Regulations at this time allow for consumer price gouging
and cause hardship for many with no benefit.
17,137 signatures
Government response on 22 January 2024:
Insurance pricing is a commercial decision for insurers. The
Financial Conduct Authority, as the independent regulator,
requires insurance products to offer fair value and has powers to
act.
Response in full
The Government is aware of the current increases in the cost of
motor insurance for many households, as well as the challenges
facing households due to the increased cost of living.
The Government does not prescribe the terms, conditions or price
that insurance companies may set when offering insurance.
Insurers make decisions about the terms on which they will offer
cover following an assessment of the relevant risks. This is
usually informed by the insurer’s claims experience and other
industry-wide statistics. At present there are wider economic
factors, such as the increased costs of materials and labour in
supply chains, that are contributing to increases in claims costs
and therefore insurance premiums.
The Government does not intend to intervene in these commercial
decisions as this could damage competition in the market.
However, the Government is determined that insurance companies
should treat customers fairly. The Financial Conduct Authority
(FCA), as the independent regulator of financial services, has
the strategic objective of ensuring that the markets it regulates
function well. In general terms, it also does not prescribe the
terms, conditions or prices set by insurers, but may take action
to achieve its objectives. For example, in 2022 the FCA
introduced rules to prevent firms charging higher renewal
premiums that exploited loyal customers.
Under FCA rules, firms are required to ensure their products
offer fair value (i.e. the price a consumer pays for a product or
service must be reasonable compared to the overall benefits they
can expect to receive). The FCA has been clear that it will be
monitoring firms to make sure they are providing products that
are fair value, and, where necessary, it will take action.
In addition to requiring insurance company’s products to offer
fair value, the FCA has a statutory objective to promote
effective competition in the interests of consumers. The FCA
works towards this objective, as far as the work is compatible
with advancing its other objectives. The FCA can also enforce
against breaches of competition law for the provision of
financial services generally, alongside the Competition and
Markets Authority. All businesses, include insurers must comply
with competition law.
Given the already existing remits and powers of the FCA and CMA,
the Government does not intend to establish a Commission to
investigate motor insurance premiums at the present time. The
Government will continue to monitor the motor insurance market
closely and continue to engage with both the regulators and the
insurance sector.
HM Treasury
At 100,000 signatures, this petition will be considered for
debate in Parliament
Petition created by Alexander Ray Salman
Deadline: 20 March 2024
