We share the results and lessons learned from our evaluation of the general insurance pricing practices (GIPP) remedies designed to address harm to consumers.
Read Evaluation Paper 25/2 (PDF)[1]
Read the Technical Annex (PDF)[2]
It’s vital the insurance sector works well and gives people peace of mind and protection when things go wrong.
We’ve assessed whether our GIPP remedies are reducing harm to consumers in the context of rising insurance prices in recent years.
We specifically looked at the effect of GIPP remedies on:
- tenure-based price walking (where firms raise prices for renewing consumers each year)
- prices
- product quality
- switching costs
Next steps
We welcome your views on this Evaluation Paper.
Please send your comments to [email protected] or Economics Department, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN.
Background
Our general insurance pricing practices (GIPP) intervention, finalised in PS21/5[3], was a package of remedies to address harm to consumers through measures relating to pricing, autorenewal, product governance and reporting requirements.
We introduced these remedies in response to a market study where we concluded some consumers were not getting fair value for their insurance products.
Our market study on general insurance pricing practices, MS18/1.3[4], identified that the home and motor markets were not working well for consumers.
Firms were using price discrimination practices to raise prices for renewing customers each year, often without their knowledge.
Some also used sludge practices to discourage switching, such as requiring phone calls to cancel autorenewals instead of allowing customers to cancel online.
These practices prevented consumers getting better deals and distorted competition leading to higher overall prices.