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Eversheds comment: FCA insurance add-ons intervention raises myriad of challenges for industry

  • United Kingdom


    Commenting on news that the UK FCA is to intervene in the insurance add-ons market, Chris Busby, partner and financial services regulation expert at global law firm Eversheds, says:

    “This is a complex and diverse market. There has been historic malpractice as recent Final Notices issued by the FCA demonstrate. However, there are some very useful add-on products so it will be necessary to analyse the benefits of each and how they have been sold to establish if there is any potential consumer detriment.”

    Jeremy Irving, partner and insurance expert at the firm, adds:

    “The FCA’s use of claims ratio statistics as a means to assess the fairness of customer treatment is a warning across the entire general insurance industry, not just in the personal lines market. The FCA has previously indicated that it would apply this technique, and insurers will need to consider whether their books of business could be deemed to be ‘too profitable’, which could lead the FCA to raise questions as to sales, marketing and claims and complaints-handling methodologies. Allegations as to excessive profitability of insurers’ books could also raise issues for intermediaries, including as to their use of delegated underwriting authorities from insurers.”


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