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General Insurance Pricing Practices

Cavere welcomes the FCA’s new rules related to General Insurance Pricing Practices. We believe that these changes will be positive for consumers and allow our agents to compete on a level playing field with brokers large and small.

However the new rules do mean we all need to make some changes in the way we work.

If you need to read the full text of the final guidance from the FCA you can read it HERE.
We encourage all brokers to review the new rules in detail to ensure they are compliant by the required deadlines.

In summary the package of changes are as follows:

  • ensure that renewal quotes for existing home insurance consumers cannot be higher than quotes for a new business customer.
  • enhance product governance, to be sure we are delivering fair value to customers, which now includes premium finance.
  • enhance FCA reporting requirements to include pricing and value measures, to ensure more effective market supervision
  • make it easier for consumers to cancel the auto renewal of their policies

What do the changes mean for our agents and brokers?

The changes are designed to make insurance pricing fairer for customers. As an authorised intermediary this means that you need to review the value and pricing you offer as part of your overall proposition.

  • Reviewing the value of every product you sell, be that Cavere policies or someone else’s.
  • Understanding how the new pricing rules may apply to your business.
  • Making sure there’s no duplication of cover, and target markets are consistent.
  • Ensuring any fees or charges you’re applying are representative – because your business model cannot have a negative impact on the value customers get from a policy.

Below are some FAQs.

Cavere Update - Dec 21
FCA Final Guidance

Product Governance & Value

Cavere along with our insurers will complete assessments for all our products. As part of our reporting requirements, we may need some information from you to help us meet these requirements. We will contact you if this is the case.

In all cases Cavere collect the premium directly from the consumer. We allow the customer to pay their premium in instalments by direct debit at no extra charge. So, the requirements for you to report on any ancillary products or premium finance should not be necessary.

Where you also use other providers, particularly those who do use premium finance contracts, it is important that you remember that the Cavere products could represent better value/lower cost to the customer when comparing the overall cost.

We will also provide you with some additional information about our products, demonstrating how they provide value to their target market. Please see the individual product pages on our website for more details. https://www.cavereintermediary.co.uk/our-products/

Pricing Remedy – ENBP (coming into force 1st January 2022)

By 1 January 2022, all existing customers must be offered a renewal price that is no greater than the equivalent new business price (ENBP) for a new customer.

These rules apply to all our household insurance products sold to consumers. The pricing remedy itself applies to the end price being charged for all relevant products. This applies to insurers for net or gross rated prices, and to you – if you have any role in setting commission or if you charge any policy set up fees separately to one of our products.

We will make sure that all our products’ pricing meets the rules for renewal invites going out from the 1st January 2022. 

You will hear more from us about these changes as we get closer to the FCA deadline (we have already started a conversation with some of you directly).

Premium Finance (coming into force 1st January 2022)

From 1st January 2021 all customers must have clear information about the cost of using premium finance to pay for their insurance. The FCA wants the industry to improve the pre-contractual information that is provided to customers when they use premium finance to pay for their insurance. The detail needs to explain that the premium finance will make the transaction more expensive, and it needs to be clear if the finance will be paid for over a term that differs to the duration of insurance policy.

There are also new rules to ensure that where premium finance is offered, it does not conflict with the Customer’s Best Interests rule – with specific reference to how firms are remunerated for offering premium finance.

The good news is that Cavere provide the facility for the customer to pay by 12 equal instalments at no extra cost. The customer will pay the same premium with us regardless of how they choose to pay.

Please make sure when comparing our quotation with those from other providers, that you include the impact of premium finance on the final price the customer pays.

Auto Renewals (coming into force 1st January 2022)

Customers must have the right amount of pre-contract information about a product’s auto renewal feature.

The FCA wants customers to have enough information on auto renewal to make an informed choice before actively electing to take or cancel auto-renewal. Customers must understand that they can change their minds at any time – without any barriers to make their required changes.

From the 1st of January you will notice an additional option in our application software (Magenta) where you can select the customers auto renewal preference.

All our new business and renewal letters to customers will also confirm the current auto-renewal status and remind them that they can change their preference at any time by logging into their online customer account, by phoning, emailing or writing to us.

General Insurance Values Reporting (required by 28th February 2022)

New rules came into force on 1 July 2021, requiring insurance firms to report on and publish General Insurance Value Measure Data on an annual basis.

Overall, these rules aim to reduce poor value in product offerings, and they widen the scope of the reporting process that’s been piloted since 2016.

The first new report will contain six months’ worth of data only, for the period 1 July 2021 – 31 December 2021.

If you have not seen this data previously you can see how each insurer’s product’s perform by visiting the FCA website HERE

Cavere do not require any information from our agents to submit this data.

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  • “F&L have developed a great working relationship with Cavere, who from the outset had a very clear vision of their product requirements, bringing years of experience in the Home Emergency sector to the table.  Paul and the whole team are easy to work with and very quick to respond allowing speed to market, with in depth understanding of customers’ requirements, enabling a stress-free product launch.”

    Jonathan Daniels

    Commercial Director, Financial & Legal

  • “We have been particularly impressed by the speed and agility they have displayed in launching the product to market in a matter of weeks. A key part of our strategy is to work with chosen partners where we have shared objectives and ambitions for sustainable profitable growth and we are looking forward to extending our partnership further in the future.”

    Tim Wright

    Director of Broker, RSA Personal Lines

  • “Ageas have been extremely impressed with the speed, agility and expertise that Cavere have demonstrated when developing their in-house technology. Cavere’s attention to detail and long-term focus will be reassuring for any of their broad range of customers.”

    Chris Dobson

    Distribution and Development Director, Ageas UK

  • “We have been very impressed by Cavere’s professional approach and attention to detail. We are confident that through their own processes and procedures, as well as the trading platform, our future business relationship can only flourish.  We would not hesitate recommending Cavere Limited.”

    Rob Hearn

    Executive Director - Sanctuary Corporate Risks

  • “We have been impressed by the speed in which Cavere have been able to utilise their technology to create a platform in a short space of time whilst remaining fully compliant with UK Retail Insurance obligations. Their attention to detail and professionalism makes me confident that they are the right outfit to form a business relationship with.”

    Roger Perry

    Class underwriter - Antares, Lloyds Syndicate 1274
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