PS16/21 – Increasing transparency and engagement at renewal in general insurance markets

Following concerns around the renewal process for general insurance policies, the FCA undertook a thorough review of disclosure and whether or not a good process could help consumers become more engaged at the renewal stage. Consultation Paper CP15/41 sought industry views on proposed changes to rules and guidance. 

Policy Statement PS16/21, published in August 2016, summarised responses received and included final rules and guidance. A relatively short 38 pages, it is a recommended read for anyone involved in dealing with general insurance products. 

There are some new rules that will have to be implemented, most of which cover the disclosure of the previous year’s premium and encouraging consumers to shop around at the renewal stage. These rules apply to both insurers and intermediaries of general insurance products to retail customers. Note that the rules also apply to policies spread over 10 months. 

Following feedback from responses to the CP15/41, the deadline for implementing the rules has been extended from 1 January 2017 to 1 April 2017. 

Firms will be required to … 

  • Disclose the previous year’s premium at each renewal, this should be either the premium the consumer started the policy with or, where relevant, an annualised premium to reflect any mid-term adjustments;
  • Include text to encourage consumers to check their cover and shop around for the best deal taking into account the level of cover as well as the price;
  • Identify customers who will be renewing for the fourth consecutive time and give them an additional prescribed message encouraging them to shop around.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

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Our View

In today’s fast paced and busy working environment, it is all too easy for customers to receive their insurance policy renewal documents and simply let the policy roll over for another year without properly shopping around or even reviewing their own personal circumstances to ensure the cover remains appropriate. 

Mindful of their remit to promote effective competition, the FCA have recognised that many customers need to be nudged to seek the best deal at renewal. We believe the new requirements can only lead to more positive outcomes for customers.

Action Required By You

  • If your firm is affected by any of these new rule changes then ensure relevant steps have been taken to action them before the deadline of 1 April 2017;
  • We recommend that you take the opportunity to read the Policy Statement PS16/21: Increasing transparency and engagement at renewal in general insurance markets- feedback on CP15/41 and final rules and guidance;
  • Ensure all advisers and staff involved in these arears are aware of the content of these Newsletters;

ATEB clients should speak with their account manager; otherwise contact ATEB here to find out how we can help.

About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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