FCA Pricing Fairness – One month in, what have we learned?
February 2, 2022 Paul De'Ath
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It is 2022 and the much anticipated General Insurance Pricing Practices rules (GIPP, otherwise known as FCA pricing fairness) have come into effect. But what has the impact been?
Our analysis suggests that the potential impact is better news for incumbents than expected.
What has happened to prices? Many factors impact new business prices in motor and home insurance but our overall view is that GIPP has increased new business pricing, although not in a uniform manner.
Customer reaction has been mixed. It is surprising that customer behaviour has changed significantly since last year: Google Trends data suggests a reduction in searching for insurance products (home insurance and car insurance keywords) but has increased for the price comparison websites.
Have we reached a status quo? In a word, no. We expect that it will take time for the pricing environment to settle down. Insurers are reviewing their pricing as regularly as systems allow and making changes as they learn about the new market equilibrium, elasticities and margin impacts.
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Paul is Head of Oxbow Partners Market Intelligence team, which helps insurance and reinsurance clients access insights into insurance markets around the world.Paul has a broad understanding of markets, a deep understanding of many of the key European players, and strong analytical foundations, all gained during his decade working as an equity research analyst covering European insurance. He is also a qualified accountant and spent time in strategy and finance roles at Standard Life.Paul is a regular commentator on UK personal lines and is often quoted in publications such as the Financial Times. He has authored a number of articles or Oxbow Partners and has built our fundamental model for the UK motor market. He regularly attends client executive and board meetings to share his perspectives.