The UK’s financial watchdog, the Financial Conduct Authority (FCA), has started a market study to understand pricing of premiums across general insurance (GI) category in the country.
Image: FCA starts market study on general insurance priciing. Photo: Courtesy of Photo: Courtesy of Photo: rawpixel/Unsplash.
The FCA stated that the market study will focus on how general insurance (GI) firms charge their customers for home and motor insurance.
The study is part of its 2018/2019 Business Plan and it would conclude a piece of supervisory work on insurance pricing practices.
As per the watchdog, it will examine the conduct of general insurance firms, the pricing practices followed by the general insurers and the fairness of the pricing.
According to the FCA, general insurance plays an important role in the UK economy, generating more than £78bn in premiums for UK insurers.
The FCA’s Financial Lives Survey says that about 82% of UK adults have one or more GI products, with home and motor insurance being the most common GI products in the country.
The regulator is concerned that general insurance pricing has the potential to harm consumers, particularly those who are vulnerable. Its goal is to ensure that retail general insurance markets offer competitive and fair prices for consumers.
The market study is expected to provide a deeper understanding of the scale of any harm to consumers from pricing practices in the general insurance industry, who it affects and, if required, what actions are needed to improve the market.
FCA CEO Andrew Bailey said: “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 work well for consumers, we will consider all possible remedies to achieve this.”
The regulator said that its supervisory work on home insurance found issues which could harm customers. This includes the firms failing to have clear pricing strategies, governance and controls. It expects insurers to look after the interests of all customers and treat them fairly.