FCA Heritage Review – PwC predictions and advice for insurers

Published at 13:31 PM on 26 October 2015

Ahead of the upcoming findings from the Financial Conduct Authority (FCA)’s Heritage Review in to historic insurance products, Matt Browne, conduct risk director in PwC’s insurance practice, explains what the insurance industry is expecting and how it should respond:

“Insurers are braced for impact and one of the main things weighing on their minds is whether the FCA and Treasury will target exit and surrender charges. These fees act as an important safeguard for insurers on older-style policies, recovering the initial costs when contracts were first set-up. The question of whether the FCA believes exit charges are excessive, locking customers into policies unfairly, still remains unanswered. And while exit charge caps may seem an extreme response, price regulation of this type is not without precedent; just ask pay-day-lenders.

“The regulator is likely to challenge the quality of communications insurers provide to their long-standing customers. Communications on newer-style policies are often clearer, but the same can’t always be said for older-style policies. If the FCA does demand a change in communications, implementing a major overhaul of IT systems will come at a price.  Savvy firms will take the opportunity to become more innovative, using data analytics coupled with behavioural science to help provide the right customer outcomes.

“Walking the tightrope between shareholders, politicians, customers and the regulator won’t be easy and the temptation for insurers may be to underplay the impact to avoid spooking shareholders. However intimidating they may look, all the fundamentals need attention and shrewd firms will have answers ready on all these issues. The main thing for firms to do is to acknowledge the issues, then plan how to tackle them, as downplaying the impact may risk a regulatory backlash further on down the track.”

Ends                                                                                    

Notes to editors

1)       Matt Browne is available for interviews. Please contact Ellie Raven on [email protected] or +44 (0) 207 804 3663.

About PwC

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. ©2015 PricewaterhouseCoopers. All rights reserved.

©2015 PricewaterhouseCoopers. All rights reserved.


Twitter
LinkedIn
Facebook
Google+

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

« PwC develops its education strategy business | Homepage | PwC acquires the business of Kusiri Limited »

  • Contact us
  • +44 (0) 20 7213 1768

Specific and out of hours contacts