The FCA has published an update on the Market Study into the ‘pure protection’ market. The FCA wants to develop a better understanding of:
- barriers to innovation and investment;
- the ‘protection gap’ – the extent to which customers, who would benefit from cover, are not adequately covered; and
- ‘access to cover’ – access for those customers that fall outside a typical definition of a ‘healthy life’, such as those with existing medical conditions.
The FCA update outlines the steps it has taken thus far to understand consumer needs, preferences and awareness of the protections available to them. This has involved a comprehensive programme of qualitative and quantitative research across consumer groups, including those who have purchased protection products and those who have changed policies or made claims. The FCA’s findings, which explore consumer perceptions, understanding and engagements with protection products, including how consumers choose products and intermediaries will be published in November.
The FCA is also assessing the role of portals, lead generators and underwriters as well as analysing the share of the value chain they represent, and the indirect role of reinsurers in shaping product design and hence the implications for consumers. Industry practices are also being reviewed including the setting of premiums and how these may vary across distribution channels, the structure and amount of commission payments, the use of panels and the overall value offered by different products and commission structures. The practice of re-broking and the frequency by which consumers change policies is also under scrutiny, to identify if this is influenced by commission or whether it leads consistently to better outcomes.