FCA tells insurers to better ensure they deliver consumer value

The Financial Conduct Authority (FCA) issued a warning to insurers and brokers on Wednesday, urging them to ensure that their products provided fair value and good outcomes for customers.

It said that while there had been improvements in governance, oversight, and the management of insurance products, it had concerns that many firms could still not demonstrate how they were delivering value to consumers.

In its report, the FCA highlighted ongoing issues related to information sharing between insurers and brokers and the identification of target markets.

The shortcomings raised questions about whether customers were receiving the appropriate value from their insurance products.

Earlier in the year, the FCA intervened in the sale of guaranteed asset protection (GAP) insurance, pausing sales with several firms due to concerns over the products' value.

However, after implementing changes to their offerings, some insurers were permitted to resume GAP insurance sales in May.

The FCA also published its latest value measures data for January to December 2023, providing further insight into the performance of insurance products in the market.

It warned that it would take regulatory action against insurers that failed to meet its standards for product value and customer outcomes.

“Insurers need to make sure their customers are getting fair value,” said the FCA’s director of insurance, Matt Brewis.

“Progress is being made, but we are still seeing too many examples of insurers and brokers lacking the right information, governance, or oversight to ensure their customers get consistently good outcomes.”

Brewis said all insurance firms should take note of the authority’s findings, and make improvements where appropriate.

“We’ll continue to take action where we see poor value so consumers can have confidence when buying insurance products.”

Reporting by Josh White for Sharecast.com.