| Link(s): | General insurance value measures data – July to December 2021 | FCA GI value measures July to December 2021 (XLSX) |
Context
Following a successful pilot, the FCA has published value measures data for a wide range of general insurance (GI) products for July to December 2021. This is a first set of data and the FCA will continue to analyse trends over time.
The FCA committed to publish GI value measures data in Policy Statement PS20/9 and the data published includes firm specific information on claims frequencies, claims acceptance rates, average claims pay-outs and claims complaints as a proportion of claims, for a wide range of retail GI products.
Firms are reminded that they must ensure their products offer fair value to consumers and take the value measures data into account when assessing fair value. Where value metrics indicate potentially poor value, it expects a firm’s Board and senior management to strongly challenge whether its products are offering fair value to consumers.
Key points to note
- The FCA is concerned about how the current picture presented in the data appears to compare with firms stating that virtually all products are providing fair value.
- The next data set due in February 2023, will be closely analysed by the FCA, which will also be testing the robustness of firms’ product oversight and governance arrangements, including fair value assessments.
- It also looks at claims costs as a proportion of premium. At an aggregated product level (where a minimum of 5 firms reported data):
- Claims costs as a proportion of premium range from 5.21% for GAP insurance (add on) to 65.95% for motorcycle (all).
- For some products, add-ons have on average lower claim costs as a proportion of premiums, compared to the corresponding standalone product.
- Products with the lowest percentage of premiums paid out in claims included GAP insurance (add-on and standalone), travel insurance (various), Excess Protection insurance (add-on) and Personal Accident insurance (add-on).
- Future datasets will cover 12-month reporting periods and give a fuller picture of product value, including a better reflection of wider factors such as seasonality.
Next actions
None – for information and awareness.