The FCA recently published its interim report into pricing practices in the general insurance industry. We are delighted to announce that research we have conducted on behalf of the FCA around the impact of the transparency rules, brought in on 1 April 2017, has been published as part of the release.
Our research has been featured in the FCAs published evaluation of its 2017 renewals rules in home, motor and pet insurance which aimed to increase transparency and engagement at renewal and encourage people to shop around. For more detailed information around the research we carried out, take a look at Annex 2 of the report.
Click here to view the full FCA report into pricing practices in the general insurance industry.
The FCAs interventions to date have improved competition and shopping rates. The FCA has a difficult job here; some of the potential remedies could end up harming market competition. It is important to recognise UK GI is already one of the most competitive in the world, with the top four players holding 31% of market share in home and 41% in motor, based on customer numbers.
The FCA’s report itself acknowledges that the industry as a whole regularly makes an underwriting loss. We therefore caution that an outright ban on charging more at renewal risks driving some firms out of the market and pushing up prices for all customers.
Our research – used in the report – shows that competition is already improving. Consumers are shopping around more since the FCA's intervention that required insurance companies to publish last year's price on renewal notices. They are also wising up to the possibility of negotiating a better deal with their insurer.
“There’s been a 3.1% pts rise in shopping around for home insurance since the FCA’s intervention, and 0.9% pts for motor. More than three out of four home insurance customers now shop around each year and nearly 85% of motorists look for the best deals every year. That includes people who have been with the same insurer for years.
"Some 12% of motorists who shop around do so chiefly to negotiate renewal price with their current insurer, compared to just 4% before the FCA's intervention.
“With the FCA's focus in today's report pinpointed on improving transparency and engagement between insurers and their customers, it's important to note that our research tells us that high levels of consumer engagement are associated with increased loyalty and a reduced likelihood of consumers shopping around, as quoted in the report. Which begs the question: do increased shopping rates lead to better consumer outcomes?"
This research was conducted using our Insurance Behaviour Tracker (IBT). Thanks to the insights provided by IBT, we have spent the last ten years successfully helping our clients in the insurance sector understand how their customers behave to enable them to create and execute great customer strategies. IBT is the most comprehensive insurance focused consumer survey in the market. It provides insight and understanding of consumer behaviour throughout the renewal process, giving you a view of market trends, and brand performance.
As a result of our research being published in the FCA report we are offering a limited time discounted access to our Consumer Shopping behaviour data. This will give you incredible insight into shopping around including:
As a result of our research being published in the FCA report we are offering a limited time discounted access to our Consumer Shopping behaviour data.
This will give you incredible insight into shopping around including: