General Insurance Pricing Practices (GIPP) (2)
- By MICHAEL HANSON
- •
- 20 Jul, 2021
YOUR COMPLIANCE MATTERS: General Insurance Pricing Practices (GIPP) (2)
Relevance: All firms.
Action required: Be prepared for potential FCA survey relating to new FCA rules on product pricing and value.
Further to our previous email, on this subject, the FCA has recently sent out a Survey questionnaire to establish firm’s readiness to address the issues relating to Pricing Practices.
As a reminder, the FCA published a policy statement that primarily (but not solely) stemmed from the practice of price differentiation, between new business and renewal premiums, how this was carried out by firms and its potential impact on consumers.
The full policy statement can be found using the following link;
New Rules:
As a reminder, the rules introduce a package of market remedies. These include:
From 01.10.21:
Additions to the product governance rules that require firms to have processes in place to deliver products that offer fair value to customers for all general insurance products. If you set the price for a product, or set fees, these requirements will apply to you directly.
There are also additional Senior management oversight requirements and reporting (the latter from 2022).
From 01.01.22:
Home and Motor renewal prices can be no greater than the equivalent price for new business. This also applies to any additional products associated with the sale, including Premium Finance, Add-on covers and Fees.
Rules requiring firms to offer accessible and easy options for customers wishing to opt out of auto-renewal. These measures will apply to all Consumer general insurance contracts with a duration of 10 months or more.
Additional Premium Finance disclosures for Consumers (not Commercial clients) regarding the cost of using finance rather than paying in full.
Reporting requirements to support the ongoing supervision of the home and motor insurance markets, including additional products such as premium finance and fees.
FCA Survey
A copy of the FCA Survey is attached to this email. The turnround time seems to be three weeks (as some supporting information is needed to complete.
If you need to discuss any aspect of this matter with us, please make contact in the normal way.
