In this Policy Statement FCA reports on the main issues arising from its Consultation Paper - Increasing transparency and engagement at renewal in general insurance markets - and confirms the final rules and non-Handbook guidance.
In December 2015, Financial Conduct Authority (FCA) consulted on new rules and guidance for general insurance renewals.
These proposals were intended to address concerns about levels of consumer engagement and the treatment of consumers by firms at renewal, and the lack of competition that results from this.
FCA based its proposals on findings from the large-scale randomised controlled trial that FCA conducted with three firms in the home and motor general insurance markets, as well as its wider research.
FCA proposed new rules across all personal lines general insurance markets requiring firms to:
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disclose last year’s premium at each renewal
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include text to encourage consumers to check their cover and shop around for the best deal at each renewal
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identify consumers who have renewed with them four consecutive times, and give these consumers an additional prescribed message encouraging them to shop around
Alongside this, FCA proposed guidance on how firms can maintain records to demonstrate compliance, including keeping a record of premiums.
FCA also proposed non-Handbook guidance to help firms meet their obligations towards consumers at renewal. This guidance detailed the importance of providing appropriate information and issuing clear communications to consumers at renewal.
It further addressed how firms should treat consumers who want to switch or cancel, and the appropriateness of fees or charges for cancelling or renewing policies.
This paper sets out our response to the feedback FCA received and also includes the final rules and guidance. FCA is proceeding with the proposals it has consulted on but have made some changes in response to this feedback.
This includes an alteration to the requirements FCA proposed so that where a consumer’s circumstances have changed during the course of holding their policy, firms must give an annualised premium reflecting any mid-term adjustments, instead of last year’s premium.
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Increasing transparency and engagement at renewal in general insurance markets
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