FCA General Insurance Pricing Practices

Here's what you need to know from us

Posted on 28th September 2021 Tagged in Regulation & Change Personal Lines
Ageas FCA Pricing Practices Web banner V1.png

Our industry welcomes the Financial Conduct Authority’s (FCA’s) new rules related to General Insurance Pricing Practices. We believe these are positive changes for consumers. However, the new rules mean we need to change several aspects of the way we work.

You can read the full text of the FCA’s new remedies as they are set out in Policy Statement PS21/5, here. We encourage you to review the new rules in detail and ensure compliance by the required deadlines.

In short, the FCA’s package of changes will:

  • ensure that renewal quotes for existing home and motor insurance consumers cannot be higher than quotes for a new business customer
  • enhance product governance, to be sure we’re all delivering fair value to customers, which now includes premium finance
  • enhance FCA reporting requirements to include pricing and value measures, to ensure more effective market supervision
  • and make it easier for consumers to cancel the auto renewal of their policies
  • increase transparency of what a customer pays for premium finance compared to an annual policy.

Here's what’s changing at Ageas, to ensure we meet the expectations of the FCA’s new pricing practices.

Product Governance & Value (needed from 1 October 2021)

To complete value assessments for all our products, we may need some information from you to help us meet some of the FCA’s requirements.

This is likely to include:

  • details of your remuneration arrangements (including commission rates, fees, charges, etc).
  • information about any optional or ancillary products (including premium finance) that you’re selling alongside Ageas’s products that may affect the value of the offering.

We’ll contact you directly with details of what we need from you.

We’ll also provide you with some additional information about our products, demonstrating how they provide value to their target market.

If you’re ever concerned our products aren’t as described, or they’re adversely affected by something else you’re selling as part of a package, then please do contact us. We’ll work with you to find a solution to the situation.

Pricing Remedy – ENBP (coming into force 1 January 2022)

As you’ll know, the FCA’s Pricing Remedy means some pricing approaches must change.

By 1 January 2022, all existing customers must be offered a renewal price that’s no greater than the equivalent new business price (ENBP) for a new customer.

These rules apply to all private motor and household insurance products sold to consumers, plus any add-on products sold with them (including premium finance). The pricing remedy itself applies to the end price being charged for all relevant products. This applies to insurers for net or gross rated prices, and to you - if you have any role in setting commission or policy set up fees.

We’ll make sure that all our products’ pricing meets the rules for renewal invites going out from the 1 January 2022. 

You’ll hear more from us about these changes as we get closer to the FCA deadline (we have started a conversation with some of you directly in particular arrangements).

Premium Finance (coming into force 1 January 2022)

Customers must have the right amount of information about the cost of using premium finance to pay for their insurance.

From 1 January 2022, premium finance must be treated as an ‘optional additional product’ and customers must actively choose it, knowing that it costs more than alternatives or paying upfront in full.

With that in mind, the FCA wants providers to improve the pre-contract information that’s being given to customers when they’re using premium finance. That detail needs to explain that the premium finance will make the transaction more expensive, and it needs to be clear if the finance will be paid for over a term that differs to the duration of insurance policy.

There are also new rules to ensure that where premium finance is offered, it does not conflict with the Customer’s Best Interests rule - with specific reference to how firms are remunerated for offering premium finance.

We’re removing our premium finance facility for all new business and renewals across our Personal Lines products. You can read more about that change here.

Auto Renewals (coming into force 1 January 2022)

Customers must have the right amount of pre-contract information about a product’s auto renewal feature.

The FCA wants customers to have enough information on auto renewal to make an informed choice before actively electing to take auto-renewal. Customers must understand that they can change their minds at any time – without any barriers to make their required changes.

General Insurance Values Reporting (required by 28 February 2022)

New rules came into force on 1 July 2021, requiring insurance firms to report on and publish General Insurance Value Measure Data on an annual basis.

Overall, these rules aim to reduce poor value in product offerings, and they widen the scope of the reporting process that’s been piloted since 2016.

The first new report will contain six months’ worth of data only, for the period 1 July 2021 - 31 December 2021.

If you’re considered to be a ‘co-manufacturer’ of one or more of the products that Ageas Insurance Limited underwrites, then we’ll be in touch from October 2021 to agree on the reportable data and duties in readiness for submission by 28 February 2022.

Related articles