General Insurance Article - FCAs GI pricing extension does not go far enough


Following the FCA’s decision to extend changes to pricing and reporting requirements until the end of 2021, new research issued today by reinsurer Swiss Re raises concerns that the timeframe is still not sufficient. In a survey of top UK insurers, results showed that almost 2/3rd’s (60%) believe that a minimum of nine months is needed for successful implementation.

 Key highlights of the study, which explored views and concerns relating to the general insurance pricing reform of executives and directors from leading UK insurance companies, as well as brokers and pricing comparison firms, include:
 • Almost two thirds (60%) of those surveyed believe 9-12 months is a realistic estimate for implementation. The current timeline for changes to pricing and reporting stands at 7 months
 • Pricing is the number one area of concern for insurers ahead of implementation
 • Firms expect customer switching to take 1-3 years to normalise post-implementation
 • Half (50%) of respondents foresee a significant expansion of brands as a result of the new regulations
 • The vast majority (95%) expect an increase in product development with the new rules in place

 The research, undertaken in conjunction with Oxbow Partners, aims to provide much-needed clarity in the lead up to the new general insurance pricing practice rules being implemented.

 Of the key areas concerning insurers, Pricing is seen as the element requiring most effort ahead of implementation, with more than half (57%) citing this view. This was followed by Governance (26%) and Renewals (13%).

 On the topic of Governance, while there is clear concern, most respondents appear confident that their management information (MI) systems are already sufficient, with almost two thirds (62%) believing no extra work will be required ahead of implementation.

 One in three (33%) said that only a few add-ons will need to be built to draw out the relevant data.

 Jason Paschalides, Senior P&C Analytics Solutions Manager at Swiss Re, comments: “Since the FCA proposed its plan to fix renewal price walking back in September, the UK market has been awash with speculation over exactly how and when the new rules will be implemented - and whether insurers will have time to put robust infrastructure in place to be fully compliant with the new rules. While the extended timeframe goes some way to alleviating the pressure, our study indicates that the implementation period could still be too short to be achievable for many players – particularly on the pricing side.”

 Of those surveyed, almost three quarters (70%) of insurers and price comparison companies expect an expansion of brands, with 50% believing this will be significant.

 Paschalides continued: “Assuming lower pricing differentials reduce switching in the market, it’s going to become much harder for insurers to grow their existing portfolios. In response, it’s likely we’ll see strong household names moving to differentiate brands within their business in order to allow for different pricing in different segments of the market. We expect a common route will be firms choosing to adopt a PCW focused brand, as well as a direct brand.”

 In terms of product development, the vast majority of respondents expect the majority of innovations to come after the rule changes, with 95% expecting an increase. Less than half (45%) believe there will be an increase in product development ahead of the rules coming into force.

 Paul De’Ath, Head of Market Intelligence at Oxbow Partners comments: “It’s clear that the current product set is unlikely to meet future customer demands. As we have seen in other fast-moving industries such as tech, the winners may not be the companies that come up with the best idea first but those who have the ability to react quickly and deliver it to customers.

 “With the FCA deadline fast approaching, this is certainly not the time for insurers to rest on their laurels. Ensuring you are well poised to compete with others in the market will be crucial as we move forward.”
  

Back to Index


Similar News to this Story

Sleighing the risks by giving Santa the insurance he needs
While you might be the most magical employer in the world, we know that even you aren’t immune to the risks of running a global delivery service! From
Diversity improving in insurance and long term savings
Key figures from the Association of British Insurers’ latest Diversity, Equity and Inclusion (DEI) data collection highlight the work of insurers and
Almost a third of homeowners have been victims of burglaries
Research commissioned by Co-op Insurance reveals that almost one in three (29%) homeowners have been the victims of theft from their home. The member-

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.