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FCA warns insurance companies over renewal rules

IBR Staff Writer Published 05 April 2018

The UK's Financial Conduct Authority (FCA) has said that insurance firms are still failing to meet the general insurance renewal rules.

The regulator warned that it will take action against general insurance companies that fail to properly implement rules introduced to increase transparency and encourage shopping around at renewal time.

The rules, which were introduced last April, require companies to clearly show the insurance premium that the customer has paid last year alongside the proposed renewal premium.

Insurance companies are also required to show a prominent, clear and straightforward message that encourages customers to shop around.

According to FCA, it has found that insurance companies still fail to implement the rules in spite of issuing a warning last October about the non-compliance.

As per the FCA, RAC has become the latest firm that has agreed to contract affected customers, after the FCA found that the company has failed to display the prior and current year premiums and shopping around message as key information in its breakdown policy renewal documentation.

Last October, The FCA had outlined how insurance companies were failing to meet the rules and highlighted four particular areas.

These included failing to implement new rules for all products and customers, misstating premiums paid in the previous years, leaving out the shopping around message and or not presenting the message in a way that can draw readers’ attention. Firms were also failing in properly identifying all customers who needed renewal information either because of system error or a mistaken interpretation of the type of customer who is captured by the rules.

FCA retail and authorisations supervision executive director Jonathan Davidson said: “It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules.  

"Firms failing to get this right may have led to consumers losing out as they do not have the right information to decide whether or not to shop around.

“We have already acted where we have seen particularly poor practice in firms and will continue to do so where we see firms not being transparent. As we said in October, we expect other firms to take notice of these issues, to look at what they are doing and to make sure they are getting it right.”


Image: FCA retail and authorisations supervision executive director Jonathan Davidson. Photo: Courtesy of FCA.