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GAP INSURANCE – FCA STUDYBack

FCAA month ago the FCA published their market study into general insurance add-ons, which included GAP insurance.

It is obvious from the report, and the NFDA’s subsequent meeting with the FCA, that they perceive what they believe is significant detriment to consumers when purchasing GAP. They also believe that dealers have a point of sale advantage that does not lead to competition in the GAP market place. The NFDA disagrees with their findings, believing that a lot of their research is incomplete and in some cases dated.

Of further concern, is the FCA’s proposed remedies for making the market more competitive. Although some, such as better information for consumers at point of sales, are to be welcomed, others we believe could actually harm the market and the consumer. Of particular concern is the FCA’s idea of an ‘opt-in’ where a dealer would not be able to sell a consumer a GAP policy until after a cooling off period. The idea behind this is to encourage consumers to shop around. However, we know that consumers feel comfortable buying at point of sale and if there were to be a cooling off period, they are less likely to buy any policy and could potentially leave themselves under-insured.

The NFDA have responded comprehensively to the FCA’s study taking a very firm stance that we believe GAP is a good product and that consumers are genuinely very happy with it. We also believe that without point of sale GAP consumers could end up under-insured if they were to write their vehicle off in an accident. We have also suggested a number of remedies that could help the market and to counter the FCA’s suggestion that there should be a cooling off period before a dealer could offer GAP to a customer.

For more information and advice please contact the NFDA on 01788 538303.

Posted by Sue Robinson on 11/04/2014