Stuart Scullion, Executive Chairman of the Association of Medical Insurers and Intermediaries (AMII) has called for the FCA (Financial Conduct Authority) to be ‘more prescriptive’ in its General Insurance Renewal requirements.
New rules came into effect on 1 April 2017 to increase transparency and engagement in the general insurance market which were set out in FCA Policy Statement PS16/21.
Stuart said: “There are two main elements to the regulation. Firstly, to provide an instant comparison for policyholders of the cost of their renewal compared against last year’s premiums. Insurers and intermediary firms must give an annualised premium reflecting any mid-term adjustments, instead of last year’s premium. Where there has been no mid-term adjustment, firms must still show last year’s premium.
“Secondly, renewal notices must include “shopping around” messages. In years one to three the FCA requires both insurers and intermediaries to include a shopping around notice, suggesting ‘Have you checked that your insurance cover still meets your needs? Have you considered shopping around to find the best deal for the cover you want?’ as an example.
“However, in year four onwards the shopping around message is in a prescribed format: ‘You have been with us for a number of years. You may be able to get the insurance cover you want at a better price if you shop around’.
“The FCA encouraged firms to display notices on the front page of their renewal notices as their research showed this was where the premium comparison and shopping around notices were most effective, although they stopped short of making this mandatory.
“Twelve months on, a recent statement from the FCA confirms some firms are not complying with the premium comparison requirements which will prompt them to take further action.
“The FCA regulation was intended to address three elements around transparency in general insurance renewals – levels of consumer engagement at policy renewal, improve the treatment of consumers and promote effective competition in the market. But has it done that?
“Yet again the healthcare sector is being impacted by an FCA broad-brush approach to general insurance business. The premium comparison problem exists in the household and motor sectors where sadly, some insurers take advantage of loyal existing consumers in their renewal premiums.
“However, healthcare is being negatively impacted. The shopping around notices are just an extension of the problem. The FCA should have issued firms with a single shopping around statement and told them where they wanted it posted in renewal documentation.
“The current arrangement is neither helpful to consumers or firms.
“If a customer has been with Insurer A for a period of six years but only used Broker B as their appointed intermediary for two years, they would receive both of the shopping around notices which only serves to confuse. In addition, it is a nightmare for insurers and intermediaries to police.
“I’d have preferred the FCA to be more prescriptive - issue a single statement and say it must be displayed on one of the first two pages of a renewal invitation. That would deliver simplicity and consistency.
“I want an FCA which is proudly the protector of the consumer, but one which does not place an unnecessary burden upon member firms. Sometimes they lose sight of that.”