The FCA has set out plans to overhaul the £1bn general insurance add-on market which include banning pre-ticked boxes and forcing firms to publish claims ratios to highlight low value products.
Add-ons products are sold alongside or bolted on to another financial products such as home or motor insurance, or alongside retail products such as holidays or cars. Add-on products can include travel insurance, home emergency cover and personal accident cover.
The regulator announced a review of the market in July. It says it found poor competition, low levels of claims and consumers potentially being overcharged up to £200m each year for products they may not need.
The FCA found the claims ratio, the proportion of the retail price paid out to settle claims, was less than 9 per cent for personal accident insurance.
FCA director of policy risk and research Christopher Woolard says: “There is a clear case for us to intervene. Competition in this market is not working well and many consumers are simply not getting value for money. Firms must start putting consumers first and stop seeing them as pound signs.
“We believe our proposals will address these issues and prevent consumers paying for poor-value insurance products that they may not need or use.”
The FCA is consulting on the plans until 8 April.