Feb 9, 2024
FCA clamps down on providers of add-on car insurance in UK
The biggest providers of a type of add-on insurance for car buyers have agreed to pause selling the product after the UK financial regulator intervened over concern that consumers were not getting value for money. The Financial Conduct Authority said providers accounting for 80 per cent of the market for so-called guaranteed asset protection insurance had agreed to the temporary ban while they implemented unspecified changes to their products. "Gap insurance can provide a useful service to customers, but in its current form it does not offer fair value and we want to see improvements," said Sheldon Mills, executive director of consumers and competition at the FCA. He added that the regulator would "Continue to work closely with firms as we carry out further engagement to resolve these issues and ensure customers are getting fair-value products that meet their needs." Drivers paid out about £300mn in premiums on 2.4mn Gap insurance policies in the UK in 2022, according to the latest data. The FCA said that only 6 per cent of the premiums were being paid out in claims, making Gap insurance hugely profitable in comparison with mainstream insurance products.
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