The insurance industry is not denying that a pricing issue exists that is impacting policyholders... and now the Financial Conduct Authority (FCA) is taking a deeper dive into the matter as it unveils a market study.
In an announcement this morning, the watchdog outlined the key areas it will examine as part of its market study into how general insurance (GI) firms charge their customers for home and motor policies. These are the consumer outcomes from pricing practices; the fairness of outcomes from pricing practices; the impact of pricing practices on competition; and remedies to address any harm that the FCA finds.
According to the regulator, home and motor insurance are the most commonly held GI products in the UK. Overall, GI generates more than £78 billion in premiums for UK insurers.
Last month the FCA talked about launching a market study after national charity Citizens Advice lodged a super-complaint with the Competition and Markets Authority (CMA). It added that it will be working closely with the CMA as the pricing super-complaint is looked into.
“Our initial work has identified a number of areas of potential consumer harm,” said FCA chief executive Andrew Bailey as part of today’s announcement. “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.”
Meanwhile the watchdog has also published a discussion paper on fair pricing in financial services markets to gather insights from stakeholders.
