15:26 PM, 30th March 2015, About 7 years ago
Property118 is in favour of new Financial Conduct Authority (FCA) proposals where insurance companies may be banned from automatically opting customers in to purchasing extra add-on insurance policies.
‘Opt-out’ selling is the practice of defaulting the consumer into buying an add-on insurance product on top of their main policy, using pre-ticked boxes. Common insurance add-ons include Home Emergency cover when purchasing Home Insurance and Breakdown Cover on top of Car Insurance.
The newly launched consultation between the FCA and the financial services industry, which closes on 25 June, will look to ban these opt out clauses.
Research by the regulator found that about one in five people don’t realise they are purchasing add-on cover because they are solely focused on buying the main product and estimate that opt-out selling wastes consumers more than £100m a year.
“We believe customers should be fully in control of the cover they are purchasing. We advise that you check options selected carefully before proceeding and always read the policy document thoroughly,” says Property 118’s Landlord Insurance expert Jason McClean.
The FCA want firms to provide customers with “more appropriate and timely” information that will allow them to make a calculated choice about whether they need the add-on products offered.
The regulator also wants to see common add-ons offered to customers earlier in the sales process, as well as the annual price of add-ons given rather than just monthly figures, so that customers can better understand the total price that they will pay.
Christopher Woolard of the FCA explains the reasoning behind the consultation: “This is about ensuring consumers can make the right decision on what add-on insurance they do or don’t need. Forgetting to un-tick a box at the end of a purchase is not making an informed choice.
“Our work shows that the opt-out model means that too often, consumers are buying a product when they have not been able to give any thought to whether or not they need it.”
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