FCA Discussion Paper DP15/4 - "General Insurance Add-ons Market Study - Remedies: Value Measures"
As many of you will be aware, the FCA has published Discussion Paper DP15/4 following the FSA review on “Add-ons” in 2013. This thematic review identified that the market was not working well for consumers and as such they proposed a number of options for the market to introduce. Members will also recall that at our meeting with the FCA in October 2014 they alluded to the fact that they would revisit previous thematic reviews. This is one such review.
Members should be aware that measures of value, when introduced, will:
(a) apply to stand-alone products as well as add-ons; and
(b) cover a wide range of products, not just the areas looked at previously (although commercial products are likely to be excluded).
In addition, the FCA is considering asking for data on value measures to be reported by distribution channel, in the hope this could show the influence distributors (including MGAs) have on the final retail price, thus highlighting varying values across the different channels.
We would like to point out that there is an error in this Paper and would ask you to read under paragraph 5.5 “Managing Agent” and not “Managing General Agent”, as written.
Attached is a list of questions the FCA is asking the profession to respond to. Whilst members selling/distributing consumer products are the ones who are going to be affected by the introduction of value measures, the fact that the FCA is even considering commercial products should, we believe, be met with resistance when it comes to the questions in Section 3 – Scope and granularity. On that basis, all members should be engaging with this paper.
The MGAA is proposing to respond to key questions asked in DP 15/4, particularly as the FCA is encouraging MGAs to engage with them as a ‘single voice’, through the Association. Therefore if you wish to contribute to this submission, please answer any questions in the attached question set on which you have particular views and return your answers to me at firstname.lastname@example.org by Monday 14th September 2015. Alternatively, if you are responding directly to the FCA, please let me have a copy of your submission, assuming you are happy to share this.