We have published the second set of data in our general insurance value measures pilot.
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.
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 consumers find it difficult to assess value due to the lack of a commonly available measure. 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 are piloting the publication of value measures data. This includes claims frequencies, claims acceptance rates and average claims pay-out by each insurer, for four general insurance products. Both UK and EEA insurers have been included in the pilot. The purpose of the pilot is to allow us to develop and refine value measures and to obtain further evidence of their impact ahead of any potential consultation.
We expect that the combined pressure generated by publicity, potential changes in wider consumer behaviour and peer review (with firms comparing their data to other firms) will provide an incentive to firms to improve the value of the services they offer customers. The datasets are not specifically targeted at individual consumers, although we recognise that a small number of consumers may use the data directly.
After the publication of the first dataset we saw examples where the publication of data has driven firms to make product improvements and improve management information to assess the value of their products. All firms regardless of their participation in their pilot, should be regularly reviewing their products. This process should be part of their conduct risk framework. Boards and senior management should also provide appropriate oversight and challenge over these discussions and ensure that potential harm arising from poor value and poor performing products is addressed.
This publication covers the year ended August 2017. The previous dataset for the year ended 31 August 2016 was published in January 2017. Following this publication we will consider whether a third pilot publication is required to better understand the impact of publishing value measures data.
Following publication of our first dataset on 25 January 2017 we are now publishing data for 36 insurers who provided claims data for the year ended 31 August 2017 in relation to the four product categories listed below. We publish the 2017 value measures data in two formats: an online table that can be sorted by column and also a downloadable spreadsheet.
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.
To find out more about the background to the pilot see:
- DP15/4 – Developing General Insurance Add-ons Market Study – Remedies: Value Measures
- FS16/1 – Feedback Statement on DP15/4 – General insurance value measures