The first deadline surrounding the FCA’s general insurance pricing reform is approaching fast - insurers and brokers must consider the implications on SME products if they haven’t done so already

By Content Director Saxon East

Get ready. The FCA’s fair pricing review also covers SME products for businesses up to a certain size and deadlines are looming.


Saxon East

Fair value is all-encompassing, meaning the FCA can cover a wide array of products under this remit.

There is still uncertainty over exactly what will be required of brokers and insurers, as well as to what degree the FCA will monitor steps taken by firms.

However, change is coming and here are five SME products that could come under the microscope.

1. Tradesman

The FCA has warned on this product - too high commissions, unfair administration fees and different firms taking their cuts.

Clearly concerned, the regulator will expect oversight of those involved in the distribution chain, as well as possible benchmarking on claims, fees and commissions.

Any broker or insurer selling tradesman that has not got the ball rolling needs to get their act together fast.

2. Business interruption

Small businesses do take out business interruption and, following the turmoil of delayed claims payments during the Covid-19 pandemic, the regulator will take a keen oversight on policy wordings and claims payment data.

3. Property

There are clearly massive issues with brokers and property agents that remain unaddressed.

Frequently, they both take massive commissions, leaving residents to mop up the costs when the premium is baked into service charges. Managing agents are likely to fall into the scope of SMEs, giving the FCA the chance to at last bring any cowboy brokers into line.

4. Professional indemnity

With sky-rocketing premiums, the regulator may probe how much value small businesses get from professional indemnity (PI).

Having worked in the past to flush out rogue agents and carriers in solicitors’ professional indemnity, the FCA is aware that certain lines of PI are problematic.

It is unlikely to be a priority area though, with other products - such as tradesman - much higher up the list.

Again, unlikely to be a priority area for the FCA, however the regulator has flagged up legal expenses in the past with concerns over value for money.

The regulator may well expect improved data collection and oversight from firms selling legal expenses to SMEs.