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The
Financial Conduct Authority (FCA) published a 'thematic review'
of the general insurance sector that found poor customer value
and potential harm due to shortcomings in product governance,
oversight and controls.
Many insurers have not implemented effective frameworks that
provide evidence of why good value is being provided to
customers, the FCA said.
Firms were also not adequately considering the total price paid
for a policy, including the impact of remuneration on the
overall value of a product.
"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," Matt Brewis, the FCA's director of
insurance, said in a statement.
The FCA introduced its Consumer Duty, comprising broad and
comprehensive consumer protections across the financial sector,
in July 2023 in a bid to draw a line under years of mis-selling
scandals in the industry.
On Wednesday it published its latest indicators for value in
insurance products, using the proportion of premiums paid in
claims as a measure.
"Where our data suggests that value appears low, we will be in
touch with firms later in the year to understand their products
and the actions they have taken to improve value," the FCA said.
Claims costs as a proportion of premiums range from 72% for
healthcare cash plans to 56% for motor insurance, and 45% for
home insurance, falling sharply across a range of 'add on'
insurance.
"Where we believe a firm has failed to act and is still
providing poor value products, we will intervene where necessary
to protect consumers," the FCA said.
(Reporting by Huw Jones; editing by Louise Heavens and Jason
Neely)
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