In July 2014, the Financial Conduct Authority published the results of the general insurance add-ons market study which showed that competition was not working well for many consumers. In June 2015, the regulator proposed a number of options for publishing product information, including:
- claims ratio as a stand-alone value measure
- claims ratio plus claims acceptance rates, and
- claims acceptance rates, claims frequencies and average claims pay-outs (the scorecard).
Today the FCA will pilot the publication of “general insurance scorecards”. They will collect data from firms and publish it in an easily accessible format on its website. Any interested parties including consumer groups will be able to use the information to compare both products and firms.
Christopher Woolard, director of strategy and competition at the FCA, said this was designed to boost competition and improve the market for consumer insurance.
“We believe that publishing a range of information will help to boost competition between firms, encouraging them to focus on improving the value and performance of their products, whilst giving stakeholders and consumers more insight into the value they offer.”
The pilot will launch this summer and will last for approximately 12 months and include two publications of the data – one at the start and one at the end of the pilot. This will inform and help the FCA refine any proposals on which we may consult. It will also provide further insight into the expected costs and benefits.
Meanwhile in the US, Lemonade is preparing to launch a peer to peer model for insurance underwriting. Lemonade has received the support of big name VCs along with a group of senior insurance executives who have “jumped ship” to join a new approach to providing insurance.