The FCA’s consultation on paper CP20/19, the General Insurance Pricing Practices Market, has now closed. The regulator will consider the feedback received on the consultation paper and engage directly with stakeholders on these matters.
The FCA aims to publish a Policy Statement (PS) by Q2 2021, with new rules coming into force four months after that subject to the feedback raised from the consultation paper.
RWA released an article in September 2020 on the consultation and the link for this can be located here.
We have been engaging with our brokers and discussing the consultation paper, bringing brokers ‘up to speed’ with the changes and how these changes may impact them.
We recently had a query regarding ‘re-broking’ if customers are placed on a product with a varying level of cover, meaning the price would not be comparable. Therefore, would either the broker or the insurer(s) be bound by the pricing rules?
This question presents two possible scenarios: at renewal, an intermediary offers an existing customer a quote with:
- their existing insurer, but with a different level of cover.
- a new insurer with a different level of cover compared to the existing policy.
In the first scenario, the proposed pricing rules would apply to both the insurer and the broker and each must ensure that their part of the premium is no higher than the equivalent new business price for the level of cover being offered. This will ensure customers get a fair deal and will have a knock-on effect of maintaining market confidence. Furthermore, this links in with the FCA’s operational objectives.
In the second scenario, the insurer is new to the customer, so the customer will be treated as a new business customer and the renewal pricing rule would not apply to the insurer. However, if the broker is involved in setting part of the premium, then they would have to ensure that their portion is set at a level that is no higher than it would be set for a new business customer.
Once the policy statement is released in Q2 RWA will communicate accordingly.
For further information, please contact your RWA Business Manager.