The FCA (Financial Conduct Authority) is carrying out a market study into how general insurance add-on products are sold and whether competition is effective in these markets. When buying these products it is important that consumers are made aware of their options so they can make an informed decision about whether the cover meets their needs.
Insurance add-ons are normally sold on the back of a main insurance policy such as a car or home insurance policy. The specific types of add-on insurance being reviewed are guaranteed asset protection (GAP) insurance, home emergency insurance, mobile phone & gadget insurance, travel and personal accident and accident cash plans, which the FCA considers are a good representation of the market.
The investigation will be looking at whether the products are priced correctly and sold in an appropriate way. They will also review sales processes or interactions that may lead to poor outcomes for consumers and also whether consumers shop around for add-on insurance products.
The study will look at whether there are common features of the add-on market that weaken
competition and leave consumers worse off. It will take into account how firms and consumers behave and how they interact to shape prices and the quality and take-up of the products.
Firms (including consumer organisations) and consumers have been asked to comment by
10 September 2013.
The FCA is expected to publish their report next year.