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FCA General Insurance Value Measures Pilot

This update covers the progress and impact of the FCA Value Measures Pilot, focusing on improving consumer choice and market transparency in general insurance products. Learn about the methodology, outcomes, observations, and future steps.

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FCA General Insurance Value Measures Pilot

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  1. FCA General Insurance Value Measures Pilot • Update for PROTECT March 2018

  2. But first…… a few words on us • MBO completed 9th March 2018 • >> • Largest privately owned Lloyd’s insurer • $1.2b net premiums in 2017 • Offices: London, Zurich, Singapore, New York, Chicago, Dublin, Bermuda & China • New COO & CFO appointments announced • 4th Year for Specialist Consumer Products team

  3. FCA Value Measures - Background • Came out of Add-ons Market Study • Like other findings / remedies – driven by micro economic theory:- • Problem is : Imperfect Market • Point of sale advantage (lack of comparison) • Renewal advantage (customer inertia) • Increased competition requires • Educate consumers on benefits of shopping around (e.g. renewal notices) • Give them the opportunity to shop around (e.g. GAP deferment period) • Give them the tools to compare providers (Value Measures Pilot)

  4. Progress to Date • March 2016 - FS16/1 Feedback Statement confirming basis for Pilot • - ‘Scorecard’ approach (c.f. claim ratio) • - 4 products : home, PA, key & Home Emergency • - 3,000 policy threshold • - 36 insurers approached • January 2017 – publication of initial data for year ended August 2016 • March 2018 – publication of second data for year ended August 2017 • Press release 1st March ‘FCA value measures pilot having a positive impact’ • “We have already seen examples of where publishing the first set of data has incentivised insurers to make product improvements and focus more on overall product value.” • - Christopher Woolard

  5. March 18 Report : Home (combined buildings and contents)

  6. March 18 Report: Personal Accident add-on to motor or home insurance

  7. Observations • Has product performance really been influenced by the pilot reporting? • Pilot is not to assess the ‘principle’ but simply the methodology • Look for further report in Feb/ March next year and roll out to all general insurance products in 2019 • Further steps? • Disclosure on each Insurer’s website • Disclosure to customers of ‘scorecard’ at point of sale? • Commission disclosure at point of sale? (raised as a possibility in DP15/4)

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