Insurers urged to understand market position ahead of Consumer Duty regulation

Insurers and financial firms have been urged to understand their market position ahead of the FCA’s Consumer Duty regulation, according to head of consumer strategy at Consumer Intelligence Catherine Carey.

The Consumer Duty regulation, which come into force on 31 July 2023, sets out a slew of updated regulations for insurance firms and other financial services firms that must be implemented.

Carey explained to Insurance Times that “insurers often have a misguided belief” that their internal view of compliance is sufficient for meeting the FCA’s requirements.

And as a result, she said many ”lack insight” on their standing.

“It is easy to talk the talk, [but] this is about walking the walk,” she added.

Market position

In an update on how firms were progressing in their implementation of the new regulation, the FCA said it wanted firms to prioritise areas that would have the biggest impact on outcomes for consumers.

It added that firms should ensure they were making changes so that consumers received communications they could understand and offered fair value.

In a statement released earlier this month (9 May 2023), Consumer Intelligence emphasised that the regulation “requires firms to act in good faith towards retail customers, avoid foreseeable harm and enable and support customers to pursue their financial objective”.

Carey explained that without insurers knowing their “market position or comparing themselves to their peers”, it could become challenging to assess the true context of their operations.

She stressed that it was crucial for insurers to understand the context and benchmark their performance against industry standards.

And she highlighted that what may seem adequate internally could actually indicate an insurer “lagging” compared to competitors, “revealing an area that needs improvement” in the market.