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PROTECT
LEGAL AND REGULATORY REVIEW
JULY 2015
It just never stops . . .
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30 + significant legal and regulatory
developments over the past 14 weeks!!

Time for one a minute until lunch!!!

So – let’s sweep up as many as possible, at twice the speed, by monthly
overviews; and

Then focus on five “biggies” (and a slow burner)

Not much time for jokes today!
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What are the Biggies?
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The biggies

The Consumer Rights Act 2015

CP15/13 – more proposed remedies from the
Add-on Insurance Market Study

TR15/7 – FCA’s report into “Delegated Authority:
Outsourcing in the General Insurance Market

PS15/13 – FCA’s final rules and guidance to
resolve competition issues in the GAP Market

DP15/4 – exploring a range of options for
introducing value measures into the GI Market

DP15/5 (the slow burner) on “Smarter Consumer
Communications”
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The Monthly Review
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March (after 20 March)

FCA published CP15/13 – further remedies from the Add-on Insurance Market Study – banning opt out
selling and proposing guidance to “improve informed decision making for add-on buyers” (a biggie)

FCA published its Business Plan for 2015/16 – light on GI specifics (but with concerns about
supervision of Appointed Representatives highlighted – so be warned)!

PRA published its views on challenges to the insurance industry - highlighting the same concern that we
will see from the FCA (in a biggie) – that insurers rely far too much on intermediaries and other niche
operators for product design and market intelligence

MAS comes out well (compared to what the Treasury wanted) from Christine Farnish’s Review. It gives
support for the MAS debt assistance role, but is less keen on the web based money advice role (others
do it better?). Oddly the Report recommends that FCA should make a rule that firms should promote the
MAS website!!!!

The Insurance Fraud Taskforce published its interim report including an initial recommendation that ABI
and BIBA should update industry guidance on the prevention of fraud by the end of the year

The Consumer Rights Act 2015 received Royal Assent on 26 March (a biggie)
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April

FCA consulted on fees and levies for 2015/16 – suggested upping them by 8.4%. In June
FCA reported how appalled everyone was with this increase – but said “tough”!!

FOS issued its plan and budget – levy frozen to reflect the beginning of the end on PPI
complaints - but FOS warned that it expects rises in complaints about packaged bank
accounts . . .

Lloyds issued its Market Oversight Supervisory Plan for 2015 – a really good overview of
risks facing the market - all in ten pages

FSCS – compensation limits are to increase from 3 July – up to 100% for general
insurance products where the claim arises from death or incapacity due to injury,
sickness, or infirmity of the policyholder or benefits are payable in the form of income
and/or other regular payment. Remember to update your consumer disclosures

FCA took on the full ambit of its competition powers – good luck!
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Moorhouse Group - enforcement

The enforcement focused on some very serious and naive failures in management systems
and controls (how are yours)?

A key issue was FCA’s demand that firms provide “balanced information” to customers

The balance is between ensuring that customers are given:



“appropriate information” about limitations and exclusions
“adequate information” on which to make an “informed decision”; and
information which is presented in a clear and fair way; but
are not overloaded with information

You have heard me say it before (and you will hear more today) . . . unless you simplify
products hugely – or slice and dice them - you are going to hit problems with the regulator

Which takes us into May and more on the same issue . .
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The ECJ on Unfair Terms

The Court found that financial products are, by nature, complex - if the language used to explain the
contract is too “plain” then some important elements of importance can be lost

The ECJ is, however, concerned that if firms remove too much complexity then this might remove
“desirable cover” from the market

However, if the desirable cover is all included - then the concepts required to describe cover can move
outside the intelligence (intelligibility) of the average (11 year old) consumer

The ECJ ruled that the test of whether product terms are fair is whether a “grammatically intelligible”
description of them can put the customer “in a position to evaluate the economic consequences which
the customer will derive from the cover”?

A big question. All firms must get to grips with this dilemma – focusing hard on who your customers are
and what is their capacity to understand, within the sales process? More on this later

Do not, for one moment, rely on cancellation periods or any other expectation that the customer will read
or understand what you write down
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More in May

FSCS announced no levy for 2015/16 for PPI claims!

FCA published a new Chapter 17 for Part 2 of the Financial Crime Guide – although directed
at commercial brokers, FCA underlined that it is relevant to all intermediaries

If you offer premium finance be very careful – FCA is on the warpath – see TR15/5
“Provision of premium finance to retail general insurance customers”. My experience is that
many firms do not understand even where credit is, and is not, involved

FCA published its new “Beta Website” – worth a look, before FCA over-populate it!

FCA announces that it is carefully considering the implications of the decision in Plevin v
Paragon Personal Finance on complaints about PPI – (more on this later)

FOS published its annual review – its stunning conclusion? That “fairness means different
things to different people”!
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Two more issues before we leave May . .
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Complaints handling . . .

Buried in a Quarterly Consultation Paper
were the amended DISP provisions
necessary to implement the Alternative
Dispute Resolution Directive by the
deadline of 9 July
Hopefully you are aware of this and have
made all the necessary changes to your
customer communications by . .
yesterday?!!

We are still awaiting FCA’s response to
the remainder of its consultation
(CP14/30) on changes to the complaints
handling rules (aimed at reducing the
number of complaints handled as “formal
complaints”)
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FCA and the Connected Contract Exemption

FCA has engaged with the industry as to whether the “connected contract” exemption can
apply to a firm which has obtained full (as opposed to interim) consumer credit
authorisation? FCA have now published a Q&A on the issue

FCA’s headline answer is that the exclusion is only available where a retailer’s “main line” of
business does not otherwise consist of carrying on a regulated activity – which simply
abbreviates a rather more complex explanation of the legal position at PERG 5.11.13

The FCA view is that, if a retailer has a main line in selling, say, computers, but sells most of
them on credit, then it has another “main line” in, regulated consumer credit (even if its CCA
permission is limited), and cannot rely on the exemption to avoid authorisation or AR status
for its insurance sales

This raises the question at what point does offering credit become a “main line”?

Some may argue that this is nonsense – the word “main” means what it says
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Into June (a biggie month) . . .
FCA published:
TR15/7 - its report into Delegated Authority: Outsourcing in the General
Insurance Market (a very big biggie)

PS15/13 - its final rules and guidance to resolve competition issues in the GAP
Market (a sort of biggie)

DP15/4 - exploring a range of options for introducing “value measures” into the
GI Market (a real biggie)

DP15/5 - on Smarter Consumer Communications (a slow burner biggie)
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July


On 1 July the European Commission confirmed that political agreement has been reached on the terms
of the new Insurance Distribution Directive (ex-IMD2) to replace IMD. We are awaiting the detailed text
but a press release contains the following information about the final agreed content:
Greater transparency: insurance distributors will have to be clearer about the price and the costs of
their products, so that it is clear to consumers what they are paying for. Significantly the press
release goes on to say “Importantly, the consumer should know whether the seller of an insurance
product has an own economic incentive to sell that particular product”

Better and more comprehensible information, so that consumers can take more informed
decisions, with a “simple, standardised Product Information Document for non-life insurance
products”

Where insurance products are offered in a package with other goods or services consumers will
have the choice to buy the goods or services without the insurance policy
The press release confirms that the provisions of the new Directive will also apply when a product is
bought directly from an insurance company
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Biggies expected by June - but not yet “out”
 New CASS 5A rules on the holding of client money by insurance
intermediaries – and how to avoid them by effective risk transfer
 The feedback to the changes to complaints handling (CP14/30)
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Now – the Biggies!
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Biggie 1
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The second consultation on Add-on Market
Remedies

Much wider application of information remedies than expected (originally directed at PCWs)

The Consultation is now closed

A new Rule to ban opt-out selling to apply to all add-on insurance products sold alongside any regulated
financial primary product. So the ban is not limited to general insurance markets. FCA have proposed
some flexibility, e.g. on renewal, provided there was a clear opt-in when the product was originally
purchased

The second “information” remedy is to be delivered via “Guidance to help firms provide appropriate
information [about add-on insurance] in a timely manner to enable customers to make an informed
decision”. The proposed Guidance focuses on:



introducing add-on insurance to customers “earlier in the sales process”;
helping customers to compare packages of primary products and add-on insurance, with a clear
price for the whole package given;
displaying the annual price of add-on insurance (as well as the monthly price); and
reminding firms that add-on insurance contracts are insurance contracts in their own right, and as
such, are subject to the full ICOBS requirements
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What FCA is trying to achieve

The Market Study found that add-ons, or
information about add-ons, were often
introduced late in the sales process

FCA state that it would like firms to consider
bringing forward the introduction of add-ons

“It is likely to be too late to discuss the most
common add-ons for the first time after the
customer has selected the primary product
they want to purchase, and moved into
transacting”

The proposed Guidance (in Appendix 2 to the
Paper) is all aimed at this
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Malcolm’s thoughts

Should not be a major impact on firms already operating compliant, principles based, customer
focused businesses

Nobody should be selling anything (except as expressly permitted) on an opt out basis

The “Information remedy” largely underscores, with detailed Guidance, the requirement of ICOBS
6.1.5R that:“a firm must take reasonable steps to ensure a customer is given appropriate information
about a policy in good time and in a comprehensible form so that the customer can make an
informed decision about the arrangements proposed”

Yet another example of the key issue that you can no longer try to sell complex, multi cover products in
a point of sale environment, and expect the consumer to take in what you are offering

Be alert that the proposed Guidance then goes on to pick up particular issues relating to packaged
product price disclosure . . . .
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Packaged Pricing

FCA say that, at present, “most firms do not
allow customers to sort or compare based on a
package of a primary product and selected
add-ons”

As such, “customers find it hard to judge the
value (total premium) of the complete package”

FCA say that, as a result, customers may select
the cheapest primary product, but not the
cheapest package of primary product and
add-ons
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What FCA would like you to do . . .

Wherever a comparison between
packages of products could be made,
you should allow customers to develop a
package of a primary product and
selected add-ons, and to deliver a
combined price for them

The individual contracts “will need to be
priced”, but a clear display of the
package price “could help provide the
customer with more appropriate
information”
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Biggie 2
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In force 1 October 2015
Two different issues

Significant changes in the regulation
of unfair contract terms

Major challenges for the warranty
market
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Unfair Terms

The 2015 Act repeals the Unfair Terms in
Consumer Contracts Regulations 1999

Replaces those Regs with tougher provisions
under which even the core provisions of your
insurance product can be assessed by FCA as
unfair - unless they are “transparent and
prominent”

FCA is updating the Unfair Contract Terms
Regulatory Guide (UNFCOG) to reflect its
increased control over product terms

Whilst on this issue . . .
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The slow burner Biggy
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Smarter Communications

FCA found that almost no one read the T&Cs - and the few that did were left none the wiser

FCA think that firms should create product descriptions and terms for consumers with at
least as much behaviourally informed creativity as is applied to business development,
marketing and financial promotions

FCA accept that T&Cs constitute (part of) the legal contract between the firm and the
consumer but huge effort is required to stick to comprehendible essentials

Particular bad practice is where a box confirming that the T&Cs have been read can be
selected by the consumer before the time it takes a person of average cognitive ability to
read the document, or where the consumer is given less time to enter into a binding
agreement than is required to read the T&Cs

These issues will crop up time and time again in other “biggies”
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Now back to Biggie 2 and the second
impact of the Consumer Rights Act
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Consumer Rights and Warranties

The 2015 Act changes the rights which consumers have to remedy defects in goods suppled
to them

The extended warranty product seeks to extend, or to give greater clarity to, these rights

PERG tells us that an extended warranty will be a contract of insurance unless it:“implements, or bears a reasonable relationship to, the seller's statutory or common law obligations
as regards the quality of goods of that kind or is a usual obligation relevant to quality or fitness in
commercial contracts for the sale of goods or supply of services of that kind”

So, if the seller’s statutory obligations change (as they do under the CRA) – so do the
boundaries of where a “dealer extended warranty” becomes insurance . . .

The non-insured warranty is already under great threat from FOS - and the CRA is not going
to help!
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Biggie 3
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Don’t be deceived by a boring title
This Review encapsulates nearly
everything which worries FCA
(competition law apart) about the way
the general insurance market is
structured and operates
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Delegated Authority . . .

TR15/7 is concerned with the issue of “delegated authority” (a Lloyds market
terminology) but the Paper apples to all “distribution chains”

The focus of the paper is (as always now) on the consumer outcomes arising from
product design and responsibility for conduct of business

FCA’s fundamental concern is that the insurer (or underwriter/managing agent) has
become far too remote from consumer outcomes

The paper says this is a significant contributor to conduct risk

The PRA (see earlier) has also identified that this behaviour contributes to prudential risks
for the insurer
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The problem

The Report (which of course averages out a wide range of findings) says that many
insurers leave judgements about product design and conduct risk to niche intermediaries

That would indeed be (generally) the industry perspective as to how “our” market often
works

Similarly the intermediary would leave prudential risk to the insurer!

FCA say that this state of affairs leaves the potential for product design (and especially
product governance) to be unresponsive to consumer needs and outcomes

FCA found breath-taking lack of knowledge within some insurers as to both product
content and as to where and how product was being distributed
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The solution

For once FCA is really alert to the dangers arising from its intervention into this issue

It says that the solution is not (as has started happening) insurers seeking to
demonstrate their control via audits etc.

Insurers need to learn about what they do not know about – not simply demand
information

FCA wants insurers to become genuinely engaged in, and reactive to, their products in the
market

The way to do this is to have even handed and open dialogue – “operational
partnerships” with their wholesale and other key intermediaries and service providers
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One idea . . .

That the “Product Oversight Group” (POG) concept be extended

That





insurers
intermediaries,
distributors,
TPA’s
delegated claims handlers
all sit on one joint POG (or POGs) so that joint product oversight, knowledge,
experience and thinking can be shared, communicated and (most important of
all) learned from
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Biggie 4
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FCA “is not for turning”

FCA reported great industry concern about
the proposed GAP remedy on which it
consulted . . .

. . and ignored it all!!!!!

“we have listened very carefully to all that
has been said to us and we are not
changing anything from our proposals in
our Consultation”

So the delivery of “required information”
followed by a “deferred opt in” will be in
force from 1 September
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Be careful . . .

PS15/13
contains
some
FCA
“expectations” which will not find their
way into any formal Guidance or Rules

You therefore do need to read
PS15/13 to pick these issues up – for
example FCA’s thinking on monitoring
high levels of “customer initiated
sales” (page 19) and on how the
required information should be
provided (pages 21 & 22)
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Biggie 5
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Some important preliminary comments

DP15/4 may have been issued under the “banner” of the Add-on Insurance
Market Study – but the matters it discusses will be applied to the whole GI market

FCA have subtly morphed its proposal for a “claims ratio” into a much wider
discussion about the value of general insurance

In essence FCA started out on its Market Study with a view that there was
something special, and particularly worrying, about add-on insurance. As it has
educated itself, over the past two years, further about the wider volume GI
markets, it has found issues of equivalent concern to it throughout that wider
market

Do not under-rate the significance of DP15/4 – along with TR15/7 it covers most
of FCA’s concern to fundamentally change the GI Market
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Note . . .
DP15/4 is not offering final
proposals for consultation (pause
for irony) but a Discussion Paper to
proceed consultation (though FCA’s
views seem pretty set)
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FCA’s introduction to the discussion . . .

“This paper explores a range of options for introducing a measure, or measures, of
value in GI markets

These measures do not give a perfect representation of value – not least because
all consumers have different needs and risk appetites – but they can be used as
indicators of value

We are committed to introducing such measures in order to shine a light on poor
value in the market place

We want to increase competition on value, and incentivise firms to improve value”
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A key preliminary issue . .

FCA are not discussing at this stage any
requirement for firms to inform
customers of any measure of the “value”
of the product being offered to them
“during their purchasing journey”

FCA say that any such point of sale
disclosure would “need to be subject to
consumer testing and would be part of a
later phase of the project” (of developing
value measures)
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So what is FCA discussing?

The collection and publication of “a measure, or measures, of value to increase
transparency in GI markets”

The incentivisation of firms to improve product value, and

An exploration of the case for a future extension of any measure(s) to be
disclosed to consumers “in due course”
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Why is FCA discussing this?

In reaction to its Market Study finding of low claims ratios within the Add-on
Market – but now extended to the wider GI Market

To consider whether some form of publication of this ratio (or some other
measure of value) would help “incentivise firms to improve product value”

FCA see this as part of its wider drive to use “transparency” (aka naming and
shaming) as a means of delivering on its competition and consumer objectives
– in line with its approach on e.g. publication of complaints data
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What value measures are FCA discussing?

The “claims ratio” as a stand-alone
value measure

A value based on a package of claims
frequencies, claims acceptance rates
and average claims pay-outs; and

The “claims ratio”
acceptance rates;

FCA reject any value based on “peace
of mind”. . .
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plus
claims
“Peace of mind”

FCA say that both consumers and firms identify “peace of mind” as a valuable part of
insurance products. However, it says, “peace of mind” is highly subjective and dependent
on an individual’s risk tolerance and wider circumstances. It can also be misplaced or
secured at very high cost

FCA found that consumers frequently overestimated their cover or failed to understand
excesses, restrictions or exclusions. This highlights that “peace of mind” can be
misplaced

Even where the consumer has purchased suitable cover, and might be justified in having
“peace of mind”, the insurance could still be overpriced

FCA conclude that “peace of mind” does not necessarily equate to a good value product
(where an assessment of cost and quality/benefits is conducted). As such, FCA did not
consider “peace of mind” as part of the value measures discussion
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Option 1: The Claims Ratio

FCA define the claims ratio as the total of paid claims and incurred but still outstanding
claims / the gross earned premiums. FCA believe the claims ratio is “a useful indicator of
value, giving an indication of potential quality across a range of factors relative to the price
paid by the consumer”

FCA say that a high (or low) claims ratio could suggest that, relative to the price paid, the
product performs well (or poorly) in terms of the following factors: the level of cover
 the probability of needing to make a claim
 the claims pay-out (which will be a reflection of the level of pay-outs and the frequency
of claims made)
 the sales process (i.e. the policy is likely to be bought by consumers who need and
understand the cover)
 the firms’ approach to handling claims, and
 the level of consumer engagement (i.e. consumers know they own the product and what
it covers)
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FCA’s views on Option 1

The Pros
 As on the previous slide – plus FCA say that products with a higher claims frequency
and claims pay-out will typically have higher claims ratios than similarly priced
products with lower frequencies and pay-outs
 Where consumers are less engaged in products this could potentially result in lower
claims frequencies and lower claims ratios

The Cons
 The claims ratio will not capture differences in customer service, which can contribute
to consumers’ experience of purchasing and owning insurance
 There may also be differences in the measure that may not be reflections of better or
poorer value. For example, firms may take different approaches to fraud prevention,
which could result in those with stronger controls having lower ratios
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FCA see the Pros outweigh the Cons

FCA say that, as an aggregate measure, the
claims ratio does not reveal which factors are
driving the resulting percentage but policies
with higher claims ratios are likely to perform
better on average, relative to the price paid

FCA believe that it is likely that any change in a
firm’s approach to pricing, claims handling,
cover and exclusions, or policy excesses will
have an impact on the claims ratio

As such, FCA conclude that the claims ratio
incorporates in one measure a number of
aspects of quality and price which can act as
an indicator of value
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Option 2: disclosing claims frequencies, claims
acceptance rates and average claims pay-outs

FCA say that claims frequencies (number of claims notified / exposure or average policies
in force) show how often consumers are likely to make a claim

Claims acceptance rates (number of claims accepted / number of claims notified (less
the number of claims still being considered) show what proportion of claims are
accepted, relative to the total number of claims made. In addition, FCA say that the
claims acceptance rate could provide an indication of the breadth of cover, the level of
restrictions in the terms and conditions and the firm’s approach to claims handling

Claims frequencies and claims acceptance rates could also potentially give an indication
of the level of consumer understanding of a product; with “consumers being more likely
to claim successfully on products that they understand better”

Average claims pay-outs (total claim pay-out / total number of claims) show the average
amount paid out for a successful claim, and could indicate the scale of exposure
consumers are typically protected against when they need to claim, although individual
claim pay-outs could fluctuate significantly from the average
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FCA’s views on Option 2

The Pros
 It would enable users to assess a number of different qualities of a product, which
could allow multiple conclusions to be drawn. Unlike a single (claims ratio) measure,
this data could potentially highlight which aspects of a product are performing better
than others – which in turn could enable firms to focus their efforts on areas where
their products are not delivering value

The Cons
 The complexities involved in understanding a number of individual measures and the
relationships between them could cause confusion for users of the information. For
example, claims frequencies and average claims pay-outs, when looked at
separately, may not adequately enable users to gain a clear understanding of the
different risks covered by a product
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Option 3: Disclosing claims ratios and
claims acceptance rates

The claims acceptance rate is the percentage of claims submitted by consumers which are
accepted by insurers

FCA think that claims acceptance rates could be an indicator of whether a product performs
well in terms of the following factors: consumers’ understanding of the level of cover provided by a product (which could give
an indication of the quality of the sales process)
 the breadth of cover
 consumers’ expectations at the time of needing to make a claim, and
 a firm’s claims handling approach

A low claims acceptance rate could highlight issues with the sale of a product; resulting in
consumers believing they are covered for an event, when in fact they are not
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FCA’s Views on Option 3

The Pros
 Using the claims ratio as a single measure is less able to point to different factors which
might be driving product value. FCA therefore see the potential for claims acceptance
rates to provide an indication of the additional aspects of product quality listed on the
previous slide

The Cons
 There will be some products which have lower claims acceptance rates than others.
Reasons for this include, e.g. there being a larger scope for query over whether a
consumer is covered for a home claim than for cover in place for a motor incident.
Therefore, a high or low claims acceptance rate will not always be an indicator of quality
– especially when looking across different product categories
 Claims acceptance rates do not link to the retail premium and cannot give an indication
of financial value. However, FCA think combining this measure with the claims ratio can
offer that link
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FCA’s overall assessment of the options

FCA believe that any of the measures
described in this chapter could potentially
meet its objectives

Its current assessment is that the claims
ratio, either on its own or with another
measure, is preferable to a package of
options. The claims ratio covers “most
elements of value in a single figure and
potentially allows a greater degree of
comparison”

FCA does recognise that there are limitations
with the claims ratio and other measures
have other potential merits – hence the
Discussion Paper and a call for further views
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How would the data on value be collected?

FCA say that insurers should have access to most of the data required. Insurers will handle
or outsource claims handling functions, and “should have strong oversight of claims and
product data”

Where products are white labelled, FCA believe the firm best placed to perform the
calculation will be the firm that performs the underwriting function for that product

For the Lloyd’s market, FCA consider that Managing General Agents are in the best position
to calculate the potential measures outlined in the Discussion Paper, although it would be
interested in receiving feedback on this point

FCA recognise that for some measures there may be gaps in the information that insurers
hold, but this should be obtainable by them - as otherwise this might “potentially raise
questions about firms’ product governance processes, and how they currently assess how
their products deliver value and good outcomes to consumers” (n.b. previous biggie)
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Reporting and Publication Periods and
Thresholds

FCA’s starting point is that the measure(s) could
be published annually, in a comparison table
format, on its website

FCA consider a one year reporting period may
provide the most helpful data, with the
possibility for the data to also be supplemented
by multi-year averages

The requirement to report value measures could
be limited to where the earned premiums for a
product, or reporting category in the most recent
year, are above a certain level. “One approach
might be to set a threshold of £1 million for
gross earned premiums by product”
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How would FCA envisage using a value
measure or measures?

FCA say that the outcomes from the collection and publication by FCA of value measures
would include: users of the data could look up results for an individual firm across a range of products, or
could compare data for a product across a number of firms
 data could be used by consumer groups and the financial press to highlight poor value
products or firms; for example through consumer campaigns or warnings
 individual consumers might consider the data in making their own buying decisions
 Price Comparison Websites might incorporate measures into their sales journeys; and
 Particularly Note: FCA could use the data as an additional source of intelligence in
prioritising areas for further investigation or supervisory intervention
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A word about DP15/4 - Chapter 6

Chapters 1 to 5 of DP15/4 contain the
issues which FCA have put up for
discussion and which we have covered in
the preceding slides

Chapter 6 deals largely with issues which
FCA considered, but then rejected

There is, however, one issue buried in
Chapter 6 which is very different . . . .
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Is commission disclosure back on the
Agenda?

FCA say that long and complex distribution chains can increase the cost of distribution and
“erode value to consumers by contributing to higher premiums”. It also says that
“Commission and other incentives can encourage intermediaries to sell products that are not
right for consumers, in turn contributing to poor consumer outcomes and low value”

FCA say that it would be “interested to hear from firms whether it should consider other ways
of capturing and highlighting distribution costs, including total commission or other distributor
income”

FCA says that any such measure could be published alongside other measures it has
considered in DP15/4, or “we could require firms to disclose this data to consumers at point
of sale”. FCA note that making the cost of distribution more transparent and the merits of
commission disclosure will “also help us consider the implications of the Supreme Court
Judgment in Plevin v Paragon Personal Finance Limited”
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What happens next on Value Measures?

Whilst FCA seem very committed to
the claims ratio as a preferred option,
it also seems genuinely interested in
further feedback on the issues raised
in the Discussion Paper

Comments must be made by 24
September 2015
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All the Biggies tell us that . .

The existing model of one (large) size fits all GI products designed and
distributed by niche intermediaries with the primary aim to deliver revenue to
non financial services-specialist providers is not acceptable

Insurers must become far more engaged with the consumer need, demand,
understanding of, and outcomes from, their products

FCA will become hugely more engaged in the “value” of products, in the content
of products and in the terms of products

Consumers must obtain, and retain, a far better understanding of what a
product offers them - and what it does not offer them
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The biggest challenge of all . . .

(which FCA recognise) is getting the balance right between the delivery of
clear, transparent and comprehendible information to customers without this
leading to customers being uninformed of key benefits, exclusions, or
limitations which may affect their decision to purchase

For me the only way forward is product simplicity – but (as the ECJ says) too
much simplicity might also remove desirable cover from the market

With FCA driving you to reveal and deliver value – the value of products has
to become more focused on the individual consumer

That means offering consumers clear choices – enabling consumers to tailormake their own cover – and making value work for you, by exposing the risks
retained by the customer if they opt for low cost insurance . . .
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Thank You
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