The FCA has stated that general insurance pricing practices can lead to different consumers paying different prices for the same insurance product, even if the cost to supply the product may be the same.
The FCA’s diagnostic work found that some consumers who stay with their home insurance provider for a long time pay prices that are much higher than those paid by new consumers. The market study will consider whether pricing practices are leading to competition working well in these markets for all consumers.
- Firms failing to have appropriate and effective strategies, governance, control and oversight of their pricing practices and activities, such that they are unable to reliably assess and evidence whether they are treating their customers fairly.
- Differential pricing leading to some identifiable groups of consumers paying significantly higher prices than other identifiable groups of consumers with similar risk and cost to serve characteristics.
- The risk of discriminating against consumers through using rating factors in pricing based (directly or indirectly) on data (including third party data) relating to or derived from protected characteristics.
The FCA aims to publish an interim market study report in Summer 2019. This will set out their preliminary conclusions including, where appropriate, a discussion of potential remedies. They aim to publish the final market study report and, where relevant, a consultation on proposed remedies by the end of 2019.
For further information on this, please contact Kirsty Jessep at Kirsty.Jessep@consumercreditcompliance.co.uk.