We have published the third set of data in our general insurance value measures pilot. We are also consulting on proposals requiring firms to report GI value measures data to us.
The value measures data will provide firms, market commentators and organisations such as consumer groups with common indicators of value across a range of insurance products. By publishing this information, we aim to create incentives for firms to compete on broader elements of product value than price alone, and to improve the value of the products and services they offer consumers.
Following publication of our second dataset on 1 March 2018 we are now publishing data for 31 insurers who provided claims data for the year ended 31 August 2018 in relation to the four pilot products listed below.
We also use the pilot data to monitor trends in the market. For the data that are comparable year on year, we set out some of the high-level comparisons between the 2017 and 2018 data.
Chart tips: hover over data series to view the data values and filter the data categories by clicking on the legend.
Figure 1: Claims frequencies
The value measures data show that claims frequencies have reduced slightly for home from 5.3% to 5.0% and home emergency (add-ons) from 7.1% to 6.1%, while claims frequencies for home emergency (standalone) have increased from 62% to 68% and key cover have increased from 1.6% to 1.9%. Average claims payouts for home insurance increased from £3,400 to £3,500.
Figure 2: Proportion of firm product submissions with claims acceptance rates above 90%
In terms of the 2018 claims acceptance rates, the chart below shows that almost three quarters of product submissions from firms involved in the pilot reported claims acceptance rates above 90%.
Figure 3: Claims acceptance rates
If we compare claims acceptance rates for 2017 and 2018, the value measures data show that claims acceptance rates have remained relatively stable across the pilot products. However, we have seen a decrease in the proportion of key cover claims which were accepted from 86% to 57%. This was largely driven by an increase in rejected claims by one firm.
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.
Find out more detail on the definitions and the information request and guidance we gave to firms providing the data.
In our general insurance add-ons market study we found poor value in both add-on and some stand-alone products sold by firms. Following the market study, we announced in Feedback Statement 16/01 that we would pilot the publication of value measures data. We have now published three annual sets of data covering claims frequencies, claims acceptance rates and average claims pay-out by UK and EEA insurers for four general insurance products. The pilot has allowed us to develop and refine value measures and obtain evidence on its impact ahead of the consultation proposals we have published.
To find out more about the background to the pilot see: