How to comply with FCA rules on Insurance communications

Apr 15th '18

The Financial Conduct Authority (FCA) is getting tough on general insurance firms that fail to follow its rules.


Earlier this month, the regulator warned that it will take action if firms don’t properly implement its rules on renewal communications. We explore what the rules are and how you can comply.


  • Why is the regulator focusing on insurers?

The FCA’s interest in insurance firm practices and communications in part stems from a thematic review it carried out in 2016.


Following the review, the regulator released updated guidance on the sector’s treatment of long-standing customers in December 2016.


The new rules were designed to increase transparency and encourage consumers to shop around at renewal time.


  • What do the rules say on renewal communications?

The renewal communications rules were introduced in April 2017.


They require firms to clearly show the insurance premium a customer paid last year alongside their proposed renewal premium.


Firms are also required to communicate a ‘prominent, clear and straightforward message to encourage customers to shop around’.


  • How are insurers falling short of FCA standards?

Despite issuing a warning in October about failings, the FCA has found that firms continue to fall short when it comes to implementing the rules.


The failings are around:


  • Lack of transparency – Jonathan Davidson of the FCA says that ‘It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules’.


This lack of transparency limits customers’ ability to shop around for insurance at renewal time. Leaving out the ‘shopping around’ message, or failing to give it due prominence is one of the key failings the regulator highlights.


  • Failing to implement the new rules for all products and customers. You need to meet the requirements across your entire customer base and full product range.
  • Mis-stating the previous years’ premium.
  • Firms failing to properly identify all customers who needed renewal information. This can be because of firms’ internal systems errors, or because they haven’t correctly interpreted the FCA rules around which customers are affected.


What steps should you take to ensure you comply?

  • Understand the rules. The regulator’s website sets out specific guidance on transparency in insurance renewals.
  • Work with your Compliance team. They will have a full understanding, not just of the insurance renewal rules, but broader guidelines on communications and financial promotions. Collaborate more closely with them and get a feel for the content that will meet or fall short of FCA standards, enabling you to write copy that Compliance can approve first time.
  • Understand how meeting other FCA guidelines can help. Many of the regulator’s requirements overlap or have much in common. Meeting one set of standards will therefore help with others. Make sure your communications follow the rules on being ‘fair, clear and not misleading’ and bear in mind the regulator’s work on Smarter Consumer Communications.
  • Make sure you get Compliance approval for your communications. As above, your Compliance team will understand what’s needed. For a more efficient sign-off experience, read 6 proven ways to make your approval process better, and if you think embedding review and sign-off in your processes will improve your compliance, explore how automation can help here.

‘Treatment of existing customers’ is one of the priority areas set out by the FCA in its 2018-19 Business Plan. So it looks as if insurance renewal communications will remain a focus for some time to come.

And with a report last year suggesting that insurers are failing to make the most of digital technology, maybe now is the time to explore how digital approaches can help you to meet regulatory requirements.


At LS Consultancy, we offer a complete solution with a range of cost effective, regulatory compliance and marketing products and solutions that are uniquely suited to supporting firms.


Explore our full range today.