The Financial Conduct Authority (FCA) has warned General Insurance firms in the UK about their practices.
It stated that certain manufacturing, sales and distribution approaches lead customers to purchasing inappropriate products, being overcharges, or receiving poor service.
Go deeper with GlobalData
The recent Insurance Distribution Directive requires all UK insurance firms to the general insurance distribution chain act in the best interests of the customer.
Furthermore, the Senior Manager and Certification Regime makes senior managers accountable for the actions of their firms.
According to the FCA, it will not hesitate to intervene with both firms and managers if they fail to have appropriate care for customers and the value they receive.
The FCA has already taken action in this department. It fined Mutual Insurance Europe £5m ($6.54m) for failing in oversight of claims. Also, the Carphone Warehouse had to pay £29m for mis-selling phone insurance and failing to address complaints regarding these sales.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataJonathan Davidson, executive director of supervision – retail and authorisations, at the FCA said: “Through our recent work we have continued to see poor manufacturing, sales and distribution approaches leading to sales of low value and inappropriate products, unfair treatment of claims and service issues.
“The widespread extent of these issues demonstrates a culture which pays insufficient regard to customer outcomes in some parts of the general insurance sector. We are going to carry out further supervisory work to make sure that firms meet their obligations and will not hesitate to use the full range of our regulatory powers.”
General insurance problems
The FCA has previously stated its concerns with regards to UK general insurance firms. It launched a General Insurance consultation regarding value measures data in January 2019.
Firms would be required to report General Insurance value measures data under the new rules.
Previously, the FCA found poor value in the General Insurance (GI) market. In addition, it witnessed no commonly available measures to assess the value for money of GI products.
As a result, the FCA has been piloting the publication of value measures data since 2016. Furthermore, the pilot has reported a positive impact in the sector. Improvements include better transparency and awareness of a common set of measure of product value, which has helped firms to assess the value of their products and also make improvements.
Rules, if introduced, would also extend the scope of value measures reporting to cover most General Insurance products. This includes a measure to identify where consumers are dissatisfied and have made a complaint as part of the claim process.
