Clamp down for ‘add-on’ travel insurance
The insurance add-on market is to be overhauled which could include banning pre-ticked boxes and forcing a more transparent sale.
The £1bn general insurance add-on market, where insurance is sold alongside goods or services like a holiday, is overcharing customers for products they may not need or use, claims the Financial Conduct Authority.
Following an investigation in July 2013, the FCA found poor competition at point of sale and low levels of claims.
Christopher Woolard, director of policy, risk and research at the FCA, said: "There’s a clear case for us to intervene. Competition in this market is not working well and many consumers are simply not getting value for money.
"Firms must start putting consumers first and stop seeing them as pound signs."
The key findings of the investigation included a lack of competition and information at point of sale, preventing consumers from making comparisons and informed decisions about products.
25% of consumers who bought insurance as an "add-on" were not aware that they could buy the product separately elsewhere.
38% of add-on buyers said they had not planned to buy add-on insurance before the day of purchase, 69% of add-on purchasers could not accurately remember how much they paid for the product three to four months later, and 19% could not even remember buying it.
The FCA is proposing banning pre-ticked boxes to ensure consumers actively choose to buy an add-on and are clear when and how they are purchasing a product .
It will also require firms to publish claims ratios to highlight low-value products, pressuring providers to deliver better value to their customers
Comments on its report and proposals must be submitted by April 8, 2014.
Diane
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