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[3], the 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[4] 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[5] 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 TR24/2: General insurance and pure protection product governance thematic review[3].
- View the FCA’s latest value measures data[6].
- In 2021, the FCA introduced rules requiring insurers to ensure their products provide fair value. This included submitting regular Value Measures Data to the FCA.
- The FCA previously wrote[7] 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.