In this Policy Statement we report on the main issues arising from Consultation Paper 14/29 Guaranteed Asset Protection insurance: a competition remedy and publish the final rules.
Why are we issuing this Policy Statement?
In our final findings report on the General Insurance Add-ons Market Study[1], we stated our concerns about competition in the Guaranteed Asset Protection (GAP) insurance market and our intention to remedy this. We are publishing final rules to give effect to this commitment.
Our final rules will empower customers when making decisions about purchasing add-on GAP insurance, and limit the point-of-sale advantage of add-on distributors.
This policy statement sets out an overview of the consultation feedback, our response and final rules.
Policy Statement PS15/13[2] [PDF]
Who is this PS aimed at?
This Policy Statement will be of interest to:
- firms distributing add-on GAP insurance
- insurance firms that underwrite GAP insurance products
- other intermediaries involved in the distribution
- firms involved in the sale of stand-alone GAP insurance, motor finance, motor insurance and motor vehicles
- customers who have purchased add-on GAP insurance in the past, or who may do so in the future
What are the next steps?
The rules set out in appendix 1 will come into force on 1 September 2015 and firms will be expected to comply from that date.
Firms distributing GAP insurance in connection with the sale of a motor vehicle (add-on GAP) will be required to:
- provide customers with prescribed information to help them shop around and be more engaged when making decisions about purchasing the product
- introduce a deferral period, which means GAP insurance cannot be introduced and sold on the same day
We expect to see better customer outcomes from more informed purchasing decisions and improved competition between add-on and standalone distribution channels as a result of these measures.
In March 2015, we published our consultation on two other remedies emerging from the Market Study (an opt-out ban and improved information requirements for add-on selling). The consultation period closes on 25 June 2015. Further, we are currently considering value measure options to apply to the wider general insurance market. We will shortly be publishing a Discussion Paper on this matter.