On 18 February 2020, the Financial Conduct Authority (FCA) published its annual Sector Views publication which considers the risks and potential harms to customers across financial services markets. The Sector Views publication includes a summary of the risks likely to impact the general insurance and protection markets. Each sector view describes actual or potential harms that might impact consumers or market effectiveness.
In addition to looking at individual sectors, the FCA summarises the impact of the macroeconomic environment, Brexit, societal changes and the financial needs of different generations and the impact of technology on the market.
The sector views on general insurance and protection identifies the following risks:
- Pricing practices still penalise loyal customers. The FCA is finalising remedies following its market study.
- Access to insurance still needs to be improved – especially for consumers with specific insurance needs such as pre-existing medical conditions.
- Ensuring that consumers are getting value from insurance distribution chains remains a concern, specifically where parties in the distribution chain receive remuneration which appears to be significantly above the costs incurred in distributing the products.
- Add-on prices continue to be a concern but rules introduced by the Insurance Distribution Directive may alleviate problems in this market.
- Culture within insurance firms in the London Market will be under scrutiny, affecting the recruitment and attraction of staff and trust in financial services.
- Although technology is enabling insurers to access more personal data for improved risk modelling, there is an increased risk of harm from the misuse of more vulnerable customers’ data.
