UK watchdog plans yardstick for insurance policies
Reuters reports that British insurance firms may be forced to publish their average payouts and claim acceptances to help consumers decide if policies offer good value under proposals floated by the market regulator on Wednesday.
A study by UK regulators in 2013 found that inadequate competition was leading to 108 million pounds annually in overpayment for general insurance ‘add-on’ policies.
It also found poor levels of payouts on claims in a sector that includes policies for insuring the health of pets, dental cover and protecting a person’s identity from theft.
The Financial Conduct Authority (FCA) proposed on Wednesday different ways to measure value for money, including a standalone monetary value of claims paid out as a percentage of premiums paid.
Alternatively, there could be a combination of measures such as frequency of claims, acceptance rates and average payouts, the FCA said.
Insurance companies would have to publish such benchmarks to increase competition and help customers choose the best policy.
‘We are committed to introducing a measure of value for general insurance products,’ Christopher Woolard, director of strategy and competition at the FCA, said in a statement.
‘We believe consumers in this market need to have greater transparency about what they are paying for.’
The proposals will be put to public consultation soon prior to formal adoption.
The FCA said the vast majority of consumers struggle to assess the value for money being offered in insurance products.
‘Their task is made harder by the fact that commonly used terms or jargon can mean different things for different products, or can be used differently by different firms.’
In 2014, some 20 million UK households had car insurance and 17 million buildings insurance.
