FCA Pricing Fairness: Our survey says…
April 19, 2021
Earlier this year Oxbow Partners and Swiss Re Solutions teamed up to offer some much-needed clarity on the market’s reaction to the pricing practices remedies proposed by the FCA for General Insurance.
Firstly, we would like to thank all those who responded to the survey, which saw input from top insurers, price comparison websites and brokers alike. Moreover, through survey responses we have raised considerable funds towards children’s mental health charity Place2Be.
As our headline takeaway would suggest, the most striking revelation is that almost two thirds of market players (60%) believe the extended 7-month timeline for implementation proposed by the FCA is still too short and 9-12 months is a far more realistic estimate. Other key findings include:
Other key findings include:
- Pricing is the number one area concerning insurers ahead of implementation
- However, most respondents are confident that their management information systems are sufficient, with almost two thirds (62%) believing no extra work will be needed ahead of implementation
- Neutral effect on Motor and Home pricing before the rules come in but 38% expect a moderate increase in motor pricing post-implementation of around 5–10%
- 67% expect increases in Home pricing after implementation potentially of more than 10%
- Long term impact on PCWs will be neutral (60%) or negative (40%)
- 75% of insurers expect a reduction in market churn with 50% expecting a small reduction of under 10%
- Customer switching expected to take 1 to 3 years to normalise after implementation
- 50% foresee a significant expansion of brands as a result of the new regulations and 95% expect an increase in product development with the new rules in place
These results offer some serious food for thought and with the FCA deadline fast approaching this is certainly not the time for insurers to rest on their laurels. With a final policy statement from the FCA expected in May this is likely to jolt many GI insurers into ramping up their ongoing implementation efforts.
For a full copy of the results report and the chance to chat around implications please contact our Market Intelligence team.
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