The Association of British Insurers (ABI) has rejected the proposal of having minimum standards or cover on products offered through price comparison websites.
The option was proposed by Baroness Bowles of Berkhamsted as a way of making insurance easier to understand, improving access for consumers and to enable like-for-like comparisons.
However, ABI director of general insurance and international Chris Bose argued changing its product standards would not improve the situation and what the industry needed was consumers to understand the sector and then make the right decisions.
In doing so, he referenced the “multimedia, multi-year campaign” to educate consumers about insurance which the trade body is preparing.
‘Like-for-like comparison’
“Should there always be a minimum or skeleton list of what is covered and they are quoting for?” Baroness Bowles (pictured) asked.
“So you know you’re doing a like-for-like comparison – if you really want a comparison, you just have to have some standard skeleton that you can take as representative,” she added.
However, Bose disagreed and argued that the regulator and consumers wanted flexibility and that it would make policies more expensive.
“If you start going down the route of hard standardisation where you mandate that insurance products define certain terms in certain ways, there is a risk that you are creating a much more rigid policy there,” he said.
“And what the FCA has indicated it would like to see and what consumers want to see is insurers exercising some flexibility and some discretion.
“On the contents of that policy – if you were to regulate to have a minimum floor to say that all policies will have these areas, inevitably that will introduce more cost for consumers.”
Instead, Bose argued that what was needed was a variety of products on the market ranging from more basic requirements to more comprehensive policies.
“What we need is consumers to understand and then make the right decisions,” he continued.
“I don’t think regulating for standardising policy terms is going to be good from affordability or an accessibility plan.”
