Consumer must be at the heart of insurance pricing practices

Following the response submission to the Financial Conduct Authority’s (FCA) consultation on General Insurance Pricing Practices, John Taylor, President at the Institute and Faculty of Actuaries (IFoA), said:

 “It is important that the home and motor insurance markets work well for consumers and the FCA’s interim report demonstrates that there is a concerning lack of transparency around how insurers determine prices. Insurers should be up front about the practice of cross-subsidy, for example when they raise prices for existing customers to subsidise new customers. Although for the most part, this practice appears unfair to the consumer, there are occasions when cross-subsidy can be a greater benefit for consumers as a collective. The onus should be on the insurance industry to communicate clearly when and why this practice is in place.

“We would also caution against putting too much emphasis on pricing alone. The focus on identifying the lowest premium could leave policyholders with cover that is less comprehensive than they expected or required. Insurers, insurance distributors as well as price comparison websites need to work harder on providing pricing transparency and communicating value for money.”

~ENDS~

Contact
Sonia Sequeira, Media Relations Manager, IFoA
Tel: 07525 592 198
Email: sonia.sequeira@actuaries.org.uk

Notes to Editor

1.         FCA General Insurance Pricing Practices Interim Report: IFoA Response. November 2019.

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