PS21/11: General insurance pricing practices - amendments

CP20/19
22/09/2020
Consultation closed
25/01/2021
Policy Statement: PS21/5
28/05/2021
Policy Statement: PS21/11
18/08/2021
18/08/2021

In May 2021, we published PS21/5 which set out our final rules to address the harm we had found in our GI Pricing Practices Market Study. On 18 August, we published PS21/11, making minor changes to these rules.

Read PS21/5 (PDF)

Read PS21/11 (PDF)

Read the Q&As on the published rules

Why we are changing our rules

The rules, published in PS21/5 and updated in PS21/11, aim to improve the way insurance markets function. They follow our consultation (CP20/19) and the final report of our Market Study (MS18/1.3), which we published in September 2020.

Our rules ensure that renewing home and motor insurance consumers are quoted prices that are no more than they would be quoted as a new customer through the same channel. We are also making it simpler for customers to stop automatic renewals if they wish to do so. We are also enhancing our product governance rules to ensure that firms deliver fair value on all their insurance products.

These rules supersede the General insurance distribution chain: Finalised guidance for insurance product manufacturers and distributors (FG19/05), which will be withdrawn when they come into effect.

Some of these rules also apply to insurers and intermediaries of other general insurance and protection products.

We also published a research paper alongside PS21/5. This contains the results of an experiment we conducted looking at consumer perceptions of and response to discounts and incentives.

Updates to our rules 

Updates in PS21/11 - 18 August 2021

Since publishing PS21/5, we have engaged with stakeholders to understand the challenges involved in implementing our rules.

PS21/11 contains updates and clarifications to address some of the issues raised. Specifically, the rules in Appendix 1 of PS21/11:  

  • clarify the application of some of our rules to firms that give discounts or other incentives to customers 
  • clarify the application of our reporting rules to intermediaries that rebate commission 
  • amend the definition of a ‘renewal’, this will alter the way in which our pricing and reporting rules apply to firms  
  • clarify the operation of the transitional rules 
  • make minor amendments to some of the reporting and other rules 

We are also publishing Q&As to address some of the questions we have received since publishing PS21/5. We will update these where we consider that further clarification is relevant to the wider market. 

We are also working on the final wording of the attestation that price-setting firms must submit under our rules. We expect to publish the form very shortly. 

Addendum - 25 June 2021 

On 25 June 2021, we made a small change to the rules published in PS21/5. This can be found in the Handbook Instrument at Annex B on page 4

As a result, the rules relating to premium finance disclosure (ICOBS 6A.5.2R and 6A.5.3R) will come into effect on 1 January 2022, instead of 1 October 2021, when the remaining rules in Annex D, Part 1 of the legal instrument (Appendix 1 of PS21/5) come into effect. 

Who this applies to

This policy statement will be of interest mainly to: 

  • general insurers and intermediaries
  • life assurers and intermediaries selling pure protection business 
  • trade bodies representing these firms
  • consumers and consumer organisations 

Next steps

The rules we are introducing come into force on:  

  • 1 October 2021 for the systems and controls, product governance and related glossary changes.
  • 1 January 2022 for the pricing and auto-renewal remedies, premium finance disclosure rules and reporting requirements, and related glossary and administrative changes. Firms have until 17 January 2022 to implement the pricing and auto renewal disclosure remedies fully, but after 1 January 2022, they must pay redress or make repayments to people if the delay to implementing negatively impacts them. 

Page updates

18/08/2021: Publication added PS21/11 - minor changes to rules.
16/07/2021: Information changed More information table updated
27/11/2020: Information added November 2020 update with Forum slides.