The Association of British Insurers (ABI), a trade association for the UK’s insurance industry, announced on Thursday that it has written to financial industry watchdog the Financial Conduct Authority (FCA) with a proposal that information given to customers who are renewing and taking out motor and home insurance should be made clearer.
ABI said it has asked the FCA to adopt a new regulatory initiative that would build upon the work the FCA has already begun in this area. The trade association has proposed that there should be a new minimum standard of information which would apply across the insurance market.
According to the ABI, insurance companies should be required to include details of the premium that the customer first paid alongside the renewal quote in renewal documents for motor and home buildings and contents insurance. Also, policy documents for new customers should explain that any introductory discounts which may have applied to new customers may not be applicable when the policy is renewed.
Under current FCA regulations, insurance companies are required to give clear and accurate advice about insurance products so that customers understand what a policy does and any limitations it may have. Policies should only be sold to customers who are eligible to claim and insurance companies should explain to customers that claims could be rejected or reduced if they give false information or fail to disclose all relevant information when making a claim. The customer must be provided with information on all elements of a policy so that customers can make an informed choice as to whether to buy a product. Also, new demands and needs statements must be provided to customers when they renew policies, in order to demonstrate that their insurance needs are fully understood and that the insurance company recommendations suit those needs.
Deputy Director General of the Association of British Insurers, Huw Evans, commented:
“Insurers want to make renewing your insurance policy easier and clearer to understand by reminding you of last year’s premium and flagging up introductory discounts.
“Most of us have home or car insurance and it is important we have the information we need when it comes to renewal.
“Our proposal, if adopted by the FCA across the market, would significantly improve transparency for millions of customers. We look forward to discussing it in detail with the FCA.”
The ABI added that it has almost 300 member companies, accounting for 90% of the UK insurance market. It also stated that the UK insurance market is the largest in Europe and the third largest in the world. It employs approximately 320,000 people and was responsible for investments of GBP1.8trn in 2012, equivalent to 25% of the UK’s total net worth.