ALA Insurance calls for FCA clarity
ALA Insurance has called a fair value warning to GAP insurance providers issued by the FCA ‘irresponsible’ as the data does not differentiate between online brokers and dealerships.
The FCA claimed it had evidence that some GAP products do not offer fair value, citing its own data which revealed only six per cent of amount customers pay in premiums is paid out in claims.
However, Simon England, founder and managing director of online car GAP insurance provider ALA Insurance has urged the FCA to clarify the data by separating brokers from dealerships.
He said: “While we know that dealerships control the vast majority of the GAP Insurance market, it’s crucial that the FCA distinguishes between the premiums charged to customers by online providers and the inflated prices offered by dealerships.
“All GAP policies have the same net rates provided by underwriters. As markets mature and costs increase of course providers have had to increase the price of premiums to cover costs, however it is the dealerships who are inflating these prices even further, with some adding further costs to justify the 70% commission that has been highlighted by the FCA. This is where customers are paying well over the odds and not receiving fair value.
“Just a few years ago the FCA were encouraging consumers to head online in order to find fair value, however this messaging does not seem consistent with this latest warning which barely recognises the hard work online providers do to provide reliable and honest coverage for their customers.”
He continued: “The FCA are going against their own goal to provide consumers with positive outcomes by giving out blanket ultimatums to an entire industry which could put drivers off policies which, when handled with integrity, are designed to protect us.”
