In our last newsletter we reported on the provisional findings of the Financial Conduct Authority (FCA) on its market study into general insurance add-on products. The FCA has published its final report on the market study and has published its final findings that:

  • the add-on mechanism has a clear impact on consumer behaviour and often affects consumers' decision-making; and
  • many consumers are getting poor value and there is a lack of transparency and comparability about the value provided by general insurance products.

The FCA identified particular concerns about ineffective competition in the add-on GAP market and the majority of feedback received by the FCA focused on the GAP market.

The FCA has proposed the following remedies:

  • "a deferred opt-in" to impose a break between purchase of the primary product and the add-on GAP;
  • a requirement to tell the customer, if the GAP is offered at point of sale,  that they can buy the product elsewhere and to provide information on how to shop around;
  • banning the use of opt-outs (for example, pre-ticked boxes);
  • improvements to how price comparison websites provide add-on options and pricing; and
  • a requirement to publish claims rations.

Consultation is to take place on the proposed remedies later on this year.