Regulator to focus on all of ‘the relevant markets’
The FSA has announced the details of its investigation into general insurance add-ons, announced by Insurance Times yesterday.
In a statement, the regulator said it would focus on all of “the relevant markets” but would single out on add-on products sold with larger purchases such as a car, holiday or electronic device.
However, insurers and brokers could also come under FSA scrutiny. In the announcement the regulator mentions a previous report that criticised the way general insurance brokers sold add-ons.
The March report, Retail Conduct Risk Outlook, said that some intermediaries were relying on low-cost, high-margin add-ons such as breakdown and keys cover to make more cash and differentiate policies.
The Retail Conduct Risk Outlook report highlighted firms ‘manufacturing general insurance products of limited utility to consumers that may therefore represent poor value and result in consumer detriment’.
The statement released today read: “The study will look at whether there are common features of the add-on markets that weaken competition and drive poor consumer outcomes.
“It will cover the whole of the relevant markets, taking full account of firms’ and consumers’ behaviour, and how they interact to shape prices and the quality and consumption of the product.”
The FSA said it would finish the study by Q3 2013 and publish the results shortly afterwards.
The regulator added: “If there are any subsequent proposals for intervention, they would be subject to the FCA’s standard procedures, including statutory consultation for any new rules.
“The study will build on this FSA work and provide a basis for the FCA to decide whether to intervene to ensure that competition works well for consumers in the markets for add-on sales of general insurance.”
No comments yet