Author Lauren Howells
Consumers may have “lost out” as a result of a number of insurance firms failing to comply with new rules, the Financial Conduct Authority has said.
Designed to “increase transparency and engagement in general insurance renewals”, rules brought in back in April apply to the renewal notices that insurance firms send out to customers.
The rules mean that firms should be:
- informing customers of their previous year’s premium so that a comparison can “easily” be made with what they are being offered this year
- encouraging consumers to check their cover and shop around for the best deal
- giving customers who have renewed four or more times an additional message encouraging them to shop around.
The regulator stipulates that all of this should be communicated in a way which “draws attention”.
Insurance firms have not been complying with the new rules
Although the FCA says that it has seen “good practice”, it points out that some insurers have not been complying with the rules by, for example, not putting the required information in a prominent position or obscuring it all together.
As well as working with the individual insurers where issues were identified, the regulator says that in some cases, it had asked that firms send follow-up communications to customers “to clarify their renewal information”.
Some firms were missing out wording designed to encourage consumers to shop around
One of the areas where several insurance firms had failed to meet the rules, was in the presentation. The FCA said that it had found that some firms were either missing out the prescribed wording to encourage consumers to shop around or additional wording had been included that “could be seen to be discouraging consumers from shopping around”.
Incorrect premium information
The regulator said it also discovered that a number of firms, when providing consumers with the premium they had paid in the previous year, had not always taken into account prior discounts or mid-term adjustments and “ did not present fees clearly and consistently across both years which made it difficult for consumers to make a clear comparison.”
Changes not implemented for all customers
A “significant number” of technical issues across insurers and intermediaries “where changes to IT systems had simply failed to implement the changes required by the new rules,” were also identified by the regulator.
Defining a “renewal”
The FCA pointed out that some firms had proposed a renewal but “had internally referred to this as an ‘expiry’ or ‘re-broking’ notice” and had therefore not given the necessary transparency information.
FCA will take “appropriate action” if rules are not complied with
The FCA made it clear that if firms did not resolve the issues voluntarily, it would take “further steps”.