General insurance pricing and fair value: new rules stall ‘price walking’

Firms that manufacture and distributegeneral insurance products, or provide finance for their purchase, should bepreparing for onerous new requirements taking effect over the coming months.The changes stem from concerns over consumer harm in the motor and homerenewals markets but their impact is far wider. Emma Radmore examinesthe background to the reforms and what the new rules require.

Emma Radmore(legaldirector) is a member of Womble Bond Dickinson’s financial services team inLondon. Contact her onemma.radmore@wbd-uk.com.

Why the need for change?

The Financial Conduct Authority has beenconcerned about pricing and renewal practices in the general insurance marketfor some time, and published a thematic review on potential harms to consumersin the household insurance sector in 2018. This was the springboard for a moredetailed investigation. In September 2020, the FCA published its final reportinto general insurance pricing practices. The report was the culmination of asignificant exercise that looked at the potential for consumer harm in the homeand motor insurance markets caused by pricing practices.