Insurers 'See Customers As Pound Signs'
The City regulator has accused insurance firms of seeing customers as pound signs in the so-called 'add-on' market, worth £1bn annually.
The Financial Conduct Authority confirmed proposals to reform the industry on Tuesday after a market investigation identified poor competition, low levels of claims and consumers potentially being overcharged by up to £200m each year for products that they may not need or even use.
A general insurance add-on is an insurance product that is sold alongside goods or services, a car or holiday for example, or other principal insurance products such as home insurance.
Christopher Woolard, director of policy, risk and research at the FCA, said: "There's a clear case for us to intervene. Competition in this market is not working well and many consumers are simply not getting value for money.
"Firms must start putting consumers first and stop seeing them as pound signs.
"We believe our proposals will address these issues and prevent consumers paying for poor-value insurance products that they may not need or use."
It is recommending the banning of pre-ticked boxes, forcing firms to publish claims ratios and breaking the point of sale advantage for guaranteed asset protection (GAP) insurance, usually offered alongside car sales.
Insurers and other market participants have until April 8 to comment on the FCA's†recommendations.
The insurance industry was yet to comment on the findings of the inquiry.
But the consumer group Which? welcomed the development.
Its executive director Richard Lloyd said: "It's good to see the Financial Conduct Authority cracking down on poor value insurance add-ons, and helping to prevent consumers being misled or caught out by signing up for products that they don't need.
"We want greater price transparency across the insurance market, including a requirement on providers to put last year's premium on renewal notices, so that consumers can find the best deal for them."
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