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FCA General Insurance Value Measures Pilot

FCA General Insurance Value Measures Pilot. Update for PROTECT March 2018. But first…… a few words on us. MBO completed 9 th March 2018 >> Largest privately owned Lloyd’s insurer $1.2b net premiums in 2017

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FCA General Insurance Value Measures Pilot

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  1. FCA General Insurance Value Measures Pilot • Update for PROTECT March 2018

  2. But first…… a few words on us • MBO completed 9th March 2018 • >> • Largest privately owned Lloyd’s insurer • $1.2b net premiums in 2017 • Offices: London, Zurich, Singapore, New York, Chicago, Dublin, Bermuda & China • New COO & CFO appointments announced • 4th Year for Specialist Consumer Products team

  3. FCA Value Measures - Background • Came out of Add-ons Market Study • Like other findings / remedies – driven by micro economic theory:- • Problem is : Imperfect Market • Point of sale advantage (lack of comparison) • Renewal advantage (customer inertia) • Increased competition requires • Educate consumers on benefits of shopping around (e.g. renewal notices) • Give them the opportunity to shop around (e.g. GAP deferment period) • Give them the tools to compare providers (Value Measures Pilot)

  4. Progress to Date • March 2016 - FS16/1 Feedback Statement confirming basis for Pilot • - ‘Scorecard’ approach (c.f. claim ratio) • - 4 products : home, PA, key & Home Emergency • - 3,000 policy threshold • - 36 insurers approached • January 2017 – publication of initial data for year ended August 2016 • March 2018 – publication of second data for year ended August 2017 • Press release 1st March ‘FCA value measures pilot having a positive impact’ • “We have already seen examples of where publishing the first set of data has incentivised insurers to make product improvements and focus more on overall product value.” • - Christopher Woolard

  5. March 18 Report : Home (combined buildings and contents)

  6. March 18 Report: Personal Accident add-on to motor or home insurance

  7. Observations • Has product performance really been influenced by the pilot reporting? • Pilot is not to assess the ‘principle’ but simply the methodology • Look for further report in Feb/ March next year and roll out to all general insurance products in 2019 • Further steps? • Disclosure on each Insurer’s website • Disclosure to customers of ‘scorecard’ at point of sale? • Commission disclosure at point of sale? (raised as a possibility in DP15/4)

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