Insurers and brokers have improved
governance and oversight of how products are designed, managed,
reviewed, and distributed, but many still cannot show how they
are providing fair value to customers or that they were receiving
good outcomes.
In a report published today, the
Financial Conduct Authority (FCA) set out issues with information
sharing between insurers and brokers, and in identifying target
markets.
Matt Brewis, Director of
Insurance at the FCA,
said:
“Insurers need to make sure their
customers are getting fair value. Progress is being made, but we
are still seeing too many examples of insurers and brokers
lacking the right information, governance, or oversight to ensure
their customers get consistently good
outcomes.
“All insurance firms should take note
of our findings and make improvements where
appropriate.
“We'll continue to take action where
we see poor value so consumers can have confidence when buying
insurance products.”
In February, the FCA agreed a
pause in the sale of
guaranteed asset protection (GAP) insurance with a number firms,
following concerns the products were not offering fair
value.
In May, it was confirmed that
the FCA permitted several GAP insurers to recommence sales
following changes to their products.
The regulator has today also published
its latest Value Measures Data (January – December
2023).
It has warned insurers that if they
cannot demonstrate that their products meet FCA rules and provide
fair value, it will take appropriate regulatory
action.
Notes to
editors
- Read our Product Oversight and Governance Thematic Review for
General Insurance and Pure Protection here.
- You can view the FCA's latest Value Measures
Data here.
- In 2021, the FCA introduc rules requiring insurers to ensure
their products provide fair value. This included submitting
regular Value Measures Data to the FCA.
- The FCA previously wrote to
insurance firms reminding them of its expectations on fair
value.
- GAP insurance is typically sold alongside car finance. It
covers the difference between a vehicle's purchase price or
outstanding finance and its current market value, in the event it
is written off before finance has been repaid.
- Following the introduction of the Consumer Duty in July 2023,
firms are also required to ensure consumers are at the heart of
their business and must act to deliver good outcomes for them.
