Stuart Scullion, Chairman Association of Medical Insurers and Intermediaries Increasing transparency and engagement at renewal in general insurance markets: PS16/21 29th September 2016

“We act to ensure that a firm has its customers at the heart of how it does business, giving them appropriate products and services, and putting their protection above profits or remuneration. To make sure consumers are protected and treated fairly, we monitor which firms and individuals are able to enter the financial markets, making sure that they meet our standards before we authorise them”.

CP15/41 Proposal Dec 2015 “These proposals address concerns about levels of consumer engagement and their treatment by firms at renewal, and the lack of competition that results from this. This can result in consumers defaulting to renew products that are not good value or have become unsuitable for their changing needs”.

CP15/41 Proposal Dec 2015 We are proposing: •Rules that require firms to disclose last year’s premium on renewal notices •Rules that require additional disclosure when customers have renewed the same product four times or more •Guidance on how firms can improve their processes around renewals •Guidance about records that firms maintain to demonstrate compliance, including a record of premiums.   We also remind firms of their obligations to treat customers fairly when developing their overall approach to renewal pricing and in their treatment of long-standing customers.

Who did FCA consult? “ In 2014, we launched a large-scale randomised controlled trial with over 300,000 customers from one home insurance and two motor insurance providers to assess whether improved disclosure can help consumers become more engaged at renewal”.

Who did FCA consult? 109 Firms 4 Insurers with an interest in health & wellbeing 109 Firms No Specialist Healthcare Intermediaries 2 Intermediary Firms with an interest in health & wellbeing

“Apply liberally to everyone engaged in the distribution, sales & administration of general insurance products” TAR

Premium comparison In order to work most effectively, we are proposing to allow firms to implement a format appropriate to their customer communications. We set out below one version of how firms might consider meeting the requirement to disclose last years’ premium:   Your renewal quote for this year is: £200.00 Last year’s premium was: £150.00 This is £50 more than last year. Remember: Check your cover Shop around for the best deal

What do we need to do? Renewal Years 1-3 suggested prompt:   For example, firms may wish to use the following prompt: ‘Have you checked that your insurance cover still meets your needs? Have you considered shopping round to find the best deal for the cover you want?’

Year 4 mandatory text We have also altered the prescribed ‘shopping around’ message, which must be provided at the fourth renewal. The new wording for the disclosure that will apply at the fourth renewal is: ‘You have been with us for a number of years. You may be able to get the insurance cover you want at a better price if you shop around.’

Why does PS16/21 cause us concern? Bundles health & wellbeing together with home & motor insurance   Undermines Consumer confidence in the value of the service being provided by their adviser Fails to recognise the complexities of medical underwriting , particularly in relation to pre-existing medical conditions Encourages “churning” Places cost above value Potentially leads to higher initial pricing

Who will be most affected? Insurer direct sales forces Anyone who operates a solus arrangement

Winners? Anyone who really takes care of their client, offering genuine independent advice……………..

Any Questions?