11 October 2013
Addressing the Annual European Credit Convention in Rome, the Consumer Panel’s Mike Dailly has set out some of the problems associated with the way insurers compete for consumers.
Mike said that the current pressure on UK insurance business models from internet comparison sites had led to firms competing and promoting policies on headline price alone. This situation has led to traditional policy features being taken out and consumers finding that they are not covered as they expected when making a claim..
Mike Dailly, Consumer Panel Working Group Chair commented: :
“Regulators face a huge challenge to ensure that industry treats customers fairly. We are pleased to see that the FCA is working proactively to try and avoid future problems in the general insurance market. The Panel expects that, with its new competition remit, the FCA will be far better equipped to get to grips with underlying market issues. The regulator will be able to look at competition issues in the insurance sector, supplementing the work it is already doing through its market study of insurance ‘add-ons’, and thematic review of comparison sites.
The PPI mis-selling scandal is a salutary lesson in what happens when regulation is insufficiently robust and intelligent. £11.5bn has been refunded in mis-sold policies since January 2011.
Industry and regulators must learn the lessons of the PPI debacle, and also ensure that consumers know where to go for help. Almost a third of consumers’ refunded PPI cash was swallowed by hungry claims management companies. This wasn’t in the interests of either consumers or the industry.”