The Financial Conduct Authority (FCA) has today set out the issues it will focus on as part of a market study into how general insurance (GI) firms charge their customers for home and motor insurance.
As part of the FCA’s 2018/2019 Business Plan, it said it would conclude a piece of supervisory work on insurance pricing practices, the results of which it has published today. The FCA has decided that a package of measures is necessary following this initial work. These include:
- Addressing conduct by firms
- A market study on general insurance pricing practices
- A wider discussion paper on fairness of pricing in financial services
GI plays a key part in the UK economy, generating over £78 billion in premiums for UK insurers. The FCA’s Financial Lives Survey shows that most UK adults (82 per cent) have one or more GI products, with home and motor insurance being the most commonly held GI products in the UK.
The FCA has been concerned that general insurance pricing practices have the potential to cause harm to consumers, particularly those who are vulnerable. The FCA’s goal is to ensure that retail general insurance markets deliver competitive and fair prices for consumers.
The market study will give the FCA a deeper understanding of the scale of any harm to consumers from general insurance pricing practices, who it affects and, if required, what actions are required to improve the market.
Andrew Bailey, the FCA’s Chief Executive, commented:
“Our initial work has identified a number of areas of potential consumer harm. We want to make sure that general insurance markets deliver competitive and fair prices for all consumers. This market study will help us examine the outcomes from general insurance pricing practices and inform how, if necessary, we should intervene to improve the market.
“If change is needed to make the market work well for consumers, we will consider all possible remedies to achieve this.”