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The FCA recently released a discussion document around the value provided by general insurance products and has suggested three potential solutions for dealers to adopt:
– a 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 “value measures” will affect all general insurance add-on sales across all market sectors, not just automotive, but the discussion paper follows on from the FCA’s crackdown on GAP insurance sales.
New value measurement rules will likely impact on the way products like MoT insurance, tyre and alloy insurance and paint protection insurance are sold in the future.
Tim Heavisides, Car Care Plan chief executive, told AM: “These proposals are totally separate to the new GAP insurance rules.
“We expect the process to go to the consultation period after September and we could see new regulations implemented by the middle of next year.”
Christopher Woolard, director of strategy and competition at the FCA, said: “We are committed to introducing a measure of value for general insurance products.
“We believe consumers in this market need to have greater transparency about what they are paying for.”
Woolard believes the FCA’s suggestions set out in the paper will boost competition between finance and insurance companies to offer better deals.
The FCA is now inviting the automotive industry to put forward its own ideas that will give consumers an indication of the value of general insurance products.
The deadline for responses to the FCA’s discussion document is September 23 and dealers can download the full paper here.
Click here to view the most recent policy statement from the FCA.