All the signs point towards further regulatory activity this year
By Matt Scott
It’s been almost six months since the FCA’s Consumer Duty regulations came into force and, since then, the regulator has been very busy wading through the data looking for outliers.
The purpose of this is to find problem areas of the market, as well as the bad actors that are failing to deliver good customer outcomes and products that don’t offer fair value for policyholders.
One of the first areas highlighted by the regulator has been the Gap insurance market, with FCA director of general insurance Matt Brewis issuing a Dear CEO letter in September of last year.
The FCA has also clearly indicated that premium finance is another area it is actively looking into.
All of this follows action taken last year against Direct Line in relation to total loss claims on motor policies and pricing discrepancies in its motor and home books.
The FCA has also said that Direct Line is not the only insurer to have failed to live up to its expectation on these matters – and more regulatory action is anticipated at some point in 2024.
Insurers in the firing line
All in all, this makes for a worrying read for insurers.
Read: Briefing – FCA not ’hiding a magic equation’ from insurance sector
Read: Briefing – FCA comes out swinging for insurance outliers
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The FCA has traditionally been much more focused on brokers when it comes to regulatory action, but these latest developments seem to hint at a change in tact from the regulator.
By focusing on the outliers in the data submitted by the market, the FCA’s investigations can quickly identify those bad actors and product lines that are performing poorly compared to the rest of the market.
It is then a case of shoring up their findings through further investigation and taking action, sometimes with s166 reviews.
For insurers, this means they need to be much more aware of where they sit in the market – both in relation to their peers and competitors, as well as across different business lines.
Benchmarking is certainly going to be one of the key words for the industry as we move through 2024.
And when poor performance is found, remedial action needs to be taken. And fast.
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