Context
The FCA has published its third full year of general insurance (GI) value measures data covering January 2024 to December 2024, accompanied by the usual spreadsheet of the data.
Key points to note and next actions
- Despite recent cost increases for consumers in motor and home insurance, the 2024 data shows the proportion of premiums paid in claims for these core products has remained broadly consistent year on year.
- The data reflects the impact of the FCA’s previous intervention on GAP insurance, with the 2024 data for GAP insurance showing claims costs as a proportion of premium of over 100%.
- Claims costs as a proportion of premium range from 20% for tyre cover (Add-on) to 69% for healthcare cash plan (All). In 2023 the range was 10% for GAP insurance (Add-on) to 72% for healthcare cash plan (All).
- Claims costs as a proportion of premium were 54% for motor insurance (56% in 2023) and 46% for home insurance (buildings and contents combined) (45% in 2023).
- The FCA found that the claims frequency rates, claims acceptance rates and claim complaints as a % of claims have not changed materially from the previous year.
- For the average claims payout, the data shows slightly higher volatility as it reflects a range of factors such as claims costs inflation. Most notable was Motorcycle (All) which fell by 12%, although this was mainly driven by a provider’s data not being included in 2024, as opposed to an overall downwards market trend.
- Claims acceptance rates in home insurance ranged across different firms from 50-55% to 95-100%. This range has been a persistent trend in the FCA’s previous data publications and it has engaged with selected firms to understand this better. Factors influencing claims acceptance rates on home insurance may include legitimate variations between firms’ products and target markets, and the possibility of inconsistent reporting between firms and differing interpretations of the FCA’s reporting guidelines (including how claims declines are recorded).