The FCA has launched a market study on general insurance (GI) pricing practice. The study will focus the fairness of pricing practices, and how they impact consumers and competition.
The regulator will also look into fairness of pricing in financial services in general, as it has invited industry figures to contribute their take on the topic for a discussion paper.
The FCA published results of supervisory work on GI today. Following this, the City watchdog expressed concern GI pricing practices can harm consumers, particularly those who are vulnerable, and announced a market study into how GI firms charge their customers for home and motor insurance.
Concerns include firms’ lack of transparency on pricing strategies, lack of governance and controls and potential non-compliance by some firms with FCA rules on transparency at renewal.
The FCA figures show 82 per cent of UK adults have one or more GI product, most commonly home and motor insurance products.
The FCA chief executive Andrew Bailey says: “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 works well for consumers, we will consider all possible remedies to achieve this.”
Fairness of pricing in general
The regulator is also looking at fairness of pricing in general, as it also launched a wider discussion paper on fairness of pricing in financial services today.
The regulator wants to hear views from stakeholders on topics of the market study. The deadline for input on the issues discussed is 3 December, 2018. The FCA says it aims to publish an interim market study report in summer 2019 with the report and, where required, consultation on proposed remedies by the end of 2019.
The FCA is also accepting input to the discussion paper on fair pricing, the deadline is 31 January 2019.