House of Lords inquiry on the consumer insurance market - Which? response

This market is particularly complex for consumers. They are unable to accurately judge their own risk profile, and they go into the purchase expecting not to actually use the product.
We have found that harms to consumers occur across the whole consumer journey: how a product is sold to a consumer; the product's content and suitability to the consumer; problems when a consumer makes a claim; and problems with the eventual claim outcome.
We welcome that the Financial Conduct Authority (FCA) accepted Which?’s super-complaint and announced five new and expanded areas of work. Due to the scale of the issues and the competitive pressures on firms, it is unlikely that voluntary initiatives by the industry will be sufficient. It is also unlikely that consumer awareness campaigns will suffice. Therefore the FCA needs to consider the interventions they must make to improve the market.
We believe there are four main areas that need to be improved in regard to the regulation of the insurance sector:
1. The FCA should develop better insight on emerging consumer harm.
2. The FCA should improve its supervision and enforcement of current rules.
3. The FCA should make new market interventions to address poor quality products and sales processes.
4. The FCA and the Government should review the consumer insurance legislation framework to make sure it is fit for purpose.

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