Insurance

JEFF PRESTRIDGE: FCA has work to do on insurance pricing

JEFF PRESTRIDGE: Controlling insurance pricing is a task the brilliant mathematician Alan Turing would have struggled with – is the FCA up to it?

Praise from the country’s financial regulator? No way, I must be dreaming. But yes, it’s true – it wasn’t a fairy tale dream I experienced a few days ago. It actually happened.

The regulator, the Financial Conduct Authority, took the time from its exhaustive three-year investigation (sarcasm intended) into the rotten investment egg that was Woodford Equity Income to applaud our work in exploring the murky world of pricing insurances. I almost fainted.

By the way, I really wouldn’t advise you to go around the world that I’ve been struggling with for six months. You enter at your own risk – I was driven mad by the whole thing.

Finger on the pulse: is the Financial Conduct Authority really up to the task of policing insurance pricing?

There’s more to the dream front. Not only has the FCA praised our investigation into whether its new rules governing auto and home insurance pricing are working or being circumvented by some insurance companies.

He has also engaged with us, which he hasn’t until very recently (he has also kept us informed of his impending regulation of the prepaid funeral plan market following our groundbreaking cesspool investigation financial institution that is the failing plan provider Safe plans des mains).

So, rather than locking itself in its chic east London ghetto and issuing advice from above, the regulator is, for the time being, very much listening.

Gracious kindness. He took in the information we sent him early last week about what many readers think of the new insurance rating rules (they don’t work) and said that was the case.

First prize for Jeff

Jeff Prestridge's Tireless Personal Finance Campaign Recognized

Jeff Prestridge’s Tireless Personal Finance Campaign Recognized

Jeff Prestridge’s tireless personal finance campaign was recognized last week when he was named protective insurance journalist of the decade.

It received the award from CIExpert critical illness insurance comparison website.

Director Alan Lakey described Prestridge, right, as ‘fearless, fair and empowering’ who was ‘never afraid to criticize or compliment – a good friend, a towering foe’.

So, as I note opposite, not only a thank you from the FCA for “the market intelligence provided to us by various parties including The Mail on Sunday” – but confirmation that it is concerned about the issues we have been raising since the turn of the year.

Namely, this so-called price march (discriminating against loyal customers in favor of new ones) has not been completely eliminated as the regulator hoped – “saving” loyal customers £4.2 billion in premiums at the course of the next decade.

The result is that the FCA has now asked between 60 and 100 companies (a mix of insurance companies and brokers) to prove to them that they have eliminated price walking – or the “loyalty bonus” as it is called. too.

As he says in his statement (left), any company found to grossly abuse the new rules faces “serious consequences”.

To elaborate, they could be barred from conducting new business until they comply with new regulations, individual administrators could be sanctioned, and hefty fines could be levied.

Although I could be wrong, I have the impression that some insurers are currently circling the regulator.

In some cases, they use the exceptions granted by the regulator to offer cheaper coverage to new customers.

Exceptions that might make sense to the regulator, but not to the many insurance company customers I’ve spoken to over the past six months.

In other cases, insurers operate close to the wire.

Controlling insurance pricing is a task the brilliant mathematician Alan Turing would have struggled with.

In the months to come, we will see if the FCA is really up to the task.

Advertising