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The 1st of October 2022 was supposed to mark the deadline for insurance distributors to have completed fair value assessments for all GI products sold to customers. The purpose of these assessments is to ensure companies are complying with product governance rules, specifically those under PROD 4, ensuring all products represent fair value to consumers – not just in financial terms, but in suitability, appropriateness, and benefit to the customer. As a result of these assessments, any products that aren’t deemed to represent fair value will have to be withdrawn from the market or changes made to ensure they are fit for purpose.

This process takes time, manufacturers need to conduct assessments on all their products and report their findings to their distribution partners to combine with their own value assessments and leave enough time for the necessary product adjustments to be completed. Working closely together is critical.

On 29th July this year, the FCA handed down a strongly worded missive, highlighting that 1 in 3 insurance manufacturers weren’t completing their own assessments in good time, leaving distribution partners unable to finalise their part in time for the deadline.  As a result of the failure of some manufacturers to act quickly, the FCA took the unusual decision to grant distributors a three-month extension, meaning they now have until the end of this year to complete the assessment of the products they sell.

Ahead of the curve

At Arc Legal Group, we take our responsibility to our distribution partners and ultimate end-customers seriously. Since the FCA announced the original deadline for assessments, we’ve worked hard to develop a clear, evidence-based framework to assess the value of each of our Legal Expenses Insurance (LEI) and Assistance products. We were ahead of the curve, making our findings available to our partners by the end of July, and by all accounts, the results were excellent. Our distribution partners were impressed with the comprehensive work we’d put in to ensure we could not only demonstrate, but also evidence that the products we manufacture represent excellent value to their customers.

The Arc Legal approach

Our approach included creating a robust metric-based framework of KPIs which included the analysis of:

  • Claim frequencies
  • Loss ratios
  • Claim acceptance rates
  • Complaint ratios
  • Cancellation ratios
  • Commission and remuneration structures

By assessing each of our products against these areas, we were able to develop and implement RAG ratings and tolerances for each metric.

We’re pleased to report that all our products passed our assessments, and we’re able to deliver our findings to our distribution partners in a format that was easy to read, and clearly based on data and evidence that we’d collected ourselves on how our products are being used. One partner said that our assessment was the “most comprehensive” they’d seen, a clear indication that we’re serious about only delivering products that add real value to customers.

Continuous improvement

In line with our philosophy of continuous innovation, we aren’t going to rest on our laurels. The insurance needs of customers change constantly, and we’re committed to ensuring that our products always represent fair value, allowing our distribution partners to sell them with confidence.

The FCA requires these assessments to be performed annually, but rather than adopting the same approach in 2023, we’re expanding the scope of our own assessment to incorporate other areas of value, for example, the provision of legal advice and other non-insured components of our products.

We’re proud of the products and services we provide and will continue to assess and develop them in response to the needs of our partners and their customers.

Tim Mullin, Director of Product Governance & Insurer Strategy, Arc Legal Group

For further information on the above, or details of our products and services, please contact your Partnerships Manager or email

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