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Following their recent study on General Insurance value measures, the Financial Conduct Authority (FCA) have released a statement that outlines their plans to pilot general insurance scorecards as a method of measuring product value, which will contain information of claims activity, including frequency, acceptance rates and average pay-out.
Richard Finan, Director of Arc Legal, has been discussing the impact of these changes on the Legal Expenses Insurance (LEI) market, highlighting his concerns about using scorecards to determine the value of the product. Richard suggested that this approach could have an opposite effect on what the regulator is trying to achieve and that the provision of specialist models for different products would be a better measure, as opposed to a singular model used across all products.
Richard went on to add that values such as the customer outcome and the level of legal fees incurred by the solicitor would highlight the wider value of LEI products, as opposed to the claims data suggested.
The FCA intend to launch the pilot of the scorecard in summer 2016 for a period of 12 months on a ‘limited number of products’, with the aim to cover two data collections. All information will be posted on their website.
Richard was speaking to Post Magazine. The full article can be found at www.postonline.co.uk.