The FCA has this morning published its General Insurance Pricing Practices policy statement, confirming a ban on price walking and expanded product governance which will require insurers and brokers to carry out fair value assessments for all products including add-ons and premium finance.
Responding to the FCA’s final General Insurance Pricing Practices policy statement Consumer Intelligence PR & Communications Manager Catherine Carey said: “This is a shot in the arm for innovation and presses a giant reset button on the relationship between price and value, it will change the relationship between brands and consumers.”
“We expect to see insurers changing their models and new firms entering the market for the first time as loss-making year one pricing phases out. If you look at these new rules, and specifically the introduction of fair value, it’s the most exciting time for the development of the general insurance market for decades.
“The customer is at the heart of these changes. The recurring theme throughout the 200 pages of rules is a drive to improve customer outcomes and fairness. For a firm to truly understand whether they are delivering long-term fair value, they need to first understand what fair value means to their customer base. This understanding will be pivotal in the success of any innovation and will enable a brand to not only ensure compliance but translate it into a sustainable and profitable customer relationship.
“Today’s report demonstrates that the FCA has listened to the industry. Amends have been made to the rules accordingly – but not to give firms an easier ride. The regulator’s amends are absolutely focused on avoiding the creation of unintended consequences and harm to consumers. Undoubtedly the next few years are going to be hard for the industry, but these changes are necessary if consumer trust is to be rebuilt.”
Consumer Intelligence CEO Ian Hughes said:
“These changes represent a tsunami for both insurers and their customers, but we should be in no doubt that the fault line that sits underneath this is fair value, mentioned 153 times in the final statement. GIPP changes will feel like just a ripple for those who don’t offer fair value to customers.
“This is going to be a bumpy ride for insurance brands and consumers alike in the short term. Today, the FCA has revealed that cash and cash-equivalent incentives, other than toys and carbon off setting, cannot be used to entice new customers without being offered to renewing customers. This means the savviest consumers who shop around each year will see prices rise and discounts and offers disappear.
“However, there is an opportunity for the industry to take advantage of all this change that is coming and do something that will be good for brands, good for the industry and good for consumers.
“The tipping point we find ourselves at today is a critical point in the journey of this industry and there is an opportunity to be positive. Those that don’t take advantage of the opportunity are going to find it really tough.”
Consumer Intelligence fair value webinar
On Friday 4 June, Consumer Intelligence will be holding a webinar to unpick the FCA's freshly published rules and help firms establish their first steps regarding implementation.
Host, Catherine Carey (PR and Communications Manager at Consumer Intelligence), welcomes guest panellists James Yerkess and Colin Robertson from HAL Consulting - both experts in fair value implementation. They will be joined by Consumer Intelligence CEO, Ian Hughes.
This expert panel will explain why firms should resist marking their own homework, as they explore what fair value implementation looks like in the wake to the FCA's new rules and share new research by Consumer Intelligence that reveals what fair value means to consumers.
Notes to editors
For further information please contact:
Catherine Carey, PR & Communications Manager, Consumer Intelligence on 07881239787
Phil Anderson/Taylor Marriott at Perception A on 07767 491 519 / 07983 335 021
About Consumer Intelligence
Consumer Intelligence (CI) is an insight partner for financial services, inspiring confident decisions that build consumer trust. For 17 years the company has been benchmarking the insurance market and retail banks in the UK and beyond. The unique combination of benchmark data, consumer research and extensive experience has helped some of the world’s major brands focus on delivering better services to customers and improving their own business performance as a result. For more information, visit the website www.consumerintelligence.com
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