The 2023 Value Measures mark the third annual set of metrics from the FCA, providing crucial insights into the value – or lack thereof – that different insurance products offer to policyholders.
GAP insurance – which the regulator notably intervened against in February of this year by halting sales – is one of the poorest performers, with just 10% of premiums being paid out in claims when sold as an add-on.
Even as a standalone product, the payout rate of 22% falls short of the 30% threshold that many compliance experts believe the FCA considers an unofficial minimum.
Several other business lines also fall below this 30% benchmark, raising concerns for an industry already under the regulatory spotlight. With the FCA's continued focus on Fair Value and customer outcomes, especially in light of the recent 12-month anniversary of the Consumer Duty, these figures are troubling.
Claims frequencies for many of these products are equally worrying, often sitting in the low single digits. Several business lines also have very low claims acceptance rates, with some of the worse performing lines seeing less than two-thirds of claims accepted by the insurer.
And this doesn’t just affect small business lines.
As well as having the lowest claims acceptance rate at just 57%, before the event legal expenses for home insurance is also among the top 10 business lines in UKGI for policies in force.
Travel insurance is another major business line that has low levels of claims accepted, with all types of travel products featured amongst the 10 poorest performing business lines for claims acceptance rates.
While the FCA may not be able to halt the sale of all these products as it did with GAP insurance, further regulatory intervention in these markets seems likely.
Given these challenges, having access to detailed and up-to-date market intelligence is more important than ever.
Insurance DataLab’s market intelligence platform offers comprehensive insights into the FCA Value Measures across all business lines, as well as for individual companies. When combined with in-depth complaints handling data, customer experience scores, and underwriting profitability, this makes it an essential tool for firms committed to Fair Value and compliance with Consumer Duty.
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