Improving transparency in insurance

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Removing - or replacing - trust
Insurance

The UK Financial Conduct Authority (FCA) recently launched a consultation over its proposals to improve transparency in the general insurance industry by forcing insurers to publish data related to product value.

Comparison website GoCompare has responded to the proposals, with founder member Lee Griffin commenting: “The FCA’s proposals will mean that in the future, most insurance products will be measured on their value, using a set of factors including claim acceptance rates and the number of claim-related complaints. Under these proposals insurers must publish the data and then use it to consider whether their products offer value to their customers. The overall aim being to increase competition on product value.

“As the first comparison site to focus on displaying policy details rather than just listing prices, and the first to incorporate independent product ratings and customer reviews, we welcome this move by the FCA. While product and price information are more readily available and transparent than ever before, the claims side of the ‘value equation’ has remained in the dark for most policyholders.”

Customers, he said, should know if a product they are considering buying is potentially less likely to pay out on a claim, or if it has been the subject of a higher than normal level of complaints relating to claims. Informed choice is an essential aspect of the purchasing process, but currently consumers basically just have to trust that their insurer will step up if the worst happens. “Key to this is the availability of data,” he continued. “If it was available now, we’d already be showing our customers the claims pay-out and experience information. We have to look at this in conjunction with other initiatives running at the moment – for example, the CMA’s work on loyalty penalties, which result in millions of existing customers paying more than new ones for the same product. Together, these two initiatives have the potential to transform the insurance landscape and significantly improve value for money for customers.”