Motor Insurance
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the effectiveness of the Financial Conduct Authority's powers in preventing insurers from applying excessive premium increases to non-fault claimants.
Answered by Emma Reynolds
Insurers make commercial decisions about pricing and the terms of cover they offer based on their assessment of the relevant risks. This is usually informed by the insurer’s claims experience and other industry-wide statistics.
However, the Government is determined that insurers should treat customers fairly and firms are required to do so under Financial Conduct Authority (FCA) rules. The FCA requires firms to ensure their products offer fair value (i.e. if the price a consumer pays for a product or service is reasonable compared to the overall benefits they can expect to receive).
The FCA have made clear they monitor firms to ensure they provide products that are fair value, and, where necessary, it has robust powers to take action against firms that fail to comply with its rules.
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