The Lloyd’s Market Association (LMA) has welcomed the Financial Conduct Authority’s (FCA) decision not to publish claims ratios as a method for consumers to assess the value of insurance products.
In a feedback statement published on 1 March, the FCA stated it would not be adopting claims ratios as a means of providing value information and would instead pilot a broader scorecard system.
Steve Morrell, LMA Manager, Legal and Compliance, said: “We gave substantive feedback to the FCA to highlight our concerns about the mandatory publication of claims ratios. Our concerns arose because such ratios would not provide a useful measure of the value of insurance products and could even be confusing to buyers. This is particularly the case for specialist products, where claims ratios can be volatile.
“It remains to be seen just how useful the scorecard will be, but we welcome the direction the FCA has taken and look forward to working with the FCA to help them shape the pilot exercise.”
The concept of publishing the claims ratios of add-on insurance products in order to create greater transparency for consumers was first raised by the FCA in a discussion paper on transparency in March 2013. The FCA has now said it will adopt a ‘scorecard’ comprising a number of different measures which it will pilot on a limited number of products.