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October 31, 2022

The Fair Value statements in line with FCA guidance

As the latest product governance rules from the Financial Conduct Authority (FCA) came into effect this month, Nelson Policies are providing brokers with official Fair Value statements for all products underwritten.

New governance rules were first introduced in 2021 by the FCA, after their General Insurance (GI) add-ons market study identified poor product value as an area of harm in general insurance. The cause was identified as ‘ineffective competition between providers of insurance products and a lack of common measures of value’. To address these issues, the new rules required firms to report GI value measures data, which included claims frequencies, claims acceptance rates, average claim pay-outs and claims complaints as a percentage of claims. They must also ensure that products offer fair value to customers in the target market.

The rules are intended to have a broad scope across a wide range of GI products. The FCA expected the value measures to improve market transparency and competition while addressing poor product value to reduce the risk of unsuitable GI products being bought or sold.

The Insurance Distribution Directive (IDD) and FCA PROD 4 rules are the latest measures and require Product Manufacturers to share information about the intended target market for their products with their Distributors.

The Fair Value statements demonstrate our commitment to ensuring our strategy is consistent with the aim of providing fair value to the customer, and that we only distribute insurance products which provide value and fair outcomes. The full compliance of Nelson Policies across all products underwritten should be viewed by brokers only.