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Surprisingly generic ABI responds to FCA study into general insurance add on products

The Financial Conduct Authority (FCA) today published its market study into selected general insurance add-on markets.

Hugh SavillCommenting on the study, Hugh Savill, the ABI’s Director of Regulation, said:

"This is a surprisingly generic study into general insurance add-on markets, which offer different products to meet differing needs, through different distribution chains. Distinct markets call for bespoke regulatory approaches, not a ‘one size fits all’ approach covering everything from GAP insurance to travel insurance. We hope and expect that the FCA will take a more market specific approach to this as their work on this develops.

Hugh Savill added:

"These markets have been changing for some time to deliver better consumer outcomes.  Opt-in insurance tick boxes are rare; and the industry has agreed guidance, through the ABI, on what consumers and car dealers need to think about when buying or selling GAP insurance alongside a vehicle; customers should shop around to get the best deal, rather than accepting a quote on a garage forecourt. We welcome the renewed focus on the role of Price Comparison Websites in giving consumers good information about add-ons.

"The emphasis upon claims ratios is unhelpful; they are not an accurate benchmark of customer value, not least because they are affected by distribution costs for the insurer. We believe claims frequency and handling provides a more relevant measure of value. Furthermore, one of the key reasons customers purchase insurance is the peace of mind it provides. We would urge the FCA to take these factors more seriously in its further work."

Last updated 01/07/2016