General Insurance add-on market study confirmed by teh FCA


FCA wants to decide on an appropriate regulatory response to any evidence of recurring poor outcomes for consumers that it finds across sales of GI add-ons. The FCA intends to carry out further consumer research as well as assessing the information it currently has and that it will receive in response to the call for evidence. Its 2014 report will include its draft conclusions on the effectiveness of competition, will ask for comments on its analysis and will include any proposed solutions for addressing any concerns identified.

The FCA has chosen five insurance products for its initial data collection from firms: guaranteed assets protection insurance, home emergency, gadget, travel and personal accident, and has set out three key areas that it is testing:

• whether the prices are excessive for a given quality;

• what consumers reasonably expect; and

• benchmarking against standalone sales.

The call for evidence merely lists two questions:

Q1. Is competition in the sale of GI add-ons working well for consumers?

Q2. Where you consider competition is not effective, why do you think that is?


While the questions are limited and the FCA confirms that it is not directly testing for mis-selling or any other form of misconduct by firms, parallels can be drawn to PPI and its add-on nature. Similarly, the announcement of the setting up of an extended warranties price comparison website gives an indication of the sorts of solutions that seem to be favoured in terms of requiring more transparency in these
types of market. The FCA no doubts feels that with some tried and tested remedies available for deployment this will be a good market to debut its competition powers and to demonstrate that it is on the front foot with issues.