In March 2018 we published the second set of data in our general insurance value measures pilot. We are now collecting a third set of value measures data across three measures: claims frequency; claims acceptance rates; and average claims payout. We intend to publish the data in the new year alongside a consultation on the reporting of GI value measures.
In our general insurance add-ons market study we found poor value in both add-on and some stand-alone products sold by firms. We also found that the issue of poor value was exacerbated by the fact that there are no commonly available measures to assess the value for money of general information products. In DP 15/4 – Developing General Insurance Add-ons Market Study – Remedies: Value Measures we set out options for publishing value measures in GI markets to help address these issues.
In Feedback Statement FS16/1 we explained that we would pilot the publication of value measures data. We expected that the publication of this data would provide incentives to firms to improve the value of the services they offer to consumers. The datasets were not specifically targeted at individual consumers, although we recognised that a small number of consumers might use the data directly. The purpose of the pilot was to allow us to develop and refine value measures and to obtain further evidence of their impact ahead of any potential consultation.
The value measures information is intended to provide consumer groups, firms and market commentators with additional indicators of value for a range of insurance products.
We consider that the pilot has had a positive impact. It has improved market transparency around a wider range of value metrics other than price, and we have seen firms using the data at a senior level to assess the value of their products and to make improvements.
Following the success of the pilot, we have decided to collect a third set of data so we can continue to monitor how the market is changing and its response to the published data. We also intend to consult on rules requiring the regular reporting of general insurance value measures data by firms to us. This will extend the scope of value measures across a wider range of general insurance products and to all relevant general insurance firms. Collecting a third set of value measures data will help inform our consultation, which we intend to publish in the new year.
We published our first two datasets in January 2017 and March 2018 in relation to the four pilot product categories listed below.
The general insurance products included are:
- Home (combined buildings and contents)
- Home emergency insurance
- Personal accident insurance sold as an add-on to motor or home insurance
- Key cover sold as an add-on to motor insurance
The value measures included in the pilot are:
- Claims frequencies: How often consumers are claiming on their insurance policies – calculated as the number of claims registered, divided by the average number of policies in force.
- Claims acceptance rates: How likely claims are to be accepted – calculated as the number of claims registered less the number of claims rejected, divided by the number of claims that have been registered.
- Average claims pay-out: Average claims pay-out which could include internal costs and relevant external costs as well as pay-outs to policy beneficiaries. For example, costs could include internal or external claim investigation costs or payments to third parties to repair a customer’s damaged wall.
For more detail on the definitions read the information request (PDF) and guidance we gave to firms. The information request for the second dataset included changes to widen the definition of an ‘add-on’, and clarify that enquiries should be excluded from the data and that buildings only and contents only policies should be excluded from the home data. Please note that the published data excludes data for rejected claims below the policy excess and rejected claims relating to fraud walkaways.
Find out more about the background to the pilot: