SUP 16.28 Home insurance and motor insurance pricing reporting

1The effect of SUP 16.1.1R is that this section applies to every firm of a type listed in column 1 of the table in SUP 16.28.8R.

This section applies to a firm which has carried on the business described in column 2 of the table in SUP 16.28.8R in relation to any of the following types of general insurance contracts:

1. (1)

   home insurance; or

2. (2)

   motor insurance.

This section does not apply in relation to the following types of products:

1. (1)

   policies entered into by a commercial customer; or

2. (2)

   group policies.

Where a firm of a type set out in column 1 of the table in SUP 16.28.8R has carried on the business in column 2 of the same row in relation to home insurance or motor insurance products, it must:

1. (1)

   submit to the FCA a report containing the specified information in relation to their home insurance and motor insurance products, add-on policies, retail premium finance and fees; and

2. (2)

   submit the report in accordance with SUP 16.28.14R to SUP 16.28.18R.

A TP firm or a Gibraltar-based firm which is of a type set out in column 1 of the table in SUP 16.28.8R (or which is treated as if it is) and has carried on the business in column 2 of the same row in relation to home insurance or motor insurance products in the UK must:

1. (1)

   submit to the FCA a report containing the specified information in relation to their UK home insurance and motor insurance products, add on policies, retail premium finance and fees; and

2. (2)

   submit the report in accordance with SUP 16.28.14R to SUP 16.28.18R.

Firms must comply with the following in relation to the table in SUP 16.28.8R.

1. (1)

   Where different insurers or managing agents underwrite different elements of the cover that forms part of the same core policy, then the insurer or managing agent underwriting the largest proportion of the cover (and in the event of any doubt, the first part of the cover recorded in the policy) must report the pricing information in SUP 16.28.11R and SUP 16.28.12R for all elements of the policy.

2. (2)

   Only the firm which sets the price of an additional product to be paid by a consumer is required to report the pricing information in SUP 16.28.13R in respect of that additional product. Where the additional product is retail premium finance and its price is set by a retail premium finance provider (and not by an insurer, an insurance intermediary or managing agent), the insurer, insurance intermediary or managing agent which has the direct relationship with the consumer must report the pricing information in SUP 16.28.13R in respect of that retail premium finance.

3. (3)

   Only the firm which levies fees on a consumer is required to report the pricing information in SUP16.28.13R in respect of those fees.

4. (4)

   Where an insurance intermediary forgoes commission or gives a cash or cash-equivalent incentive (within the meaning of ICOBS 6B.2.12R) on the premium on gross-rated business, this business must only be reported by the insurer with its gross-rated business (not separately by the insurance intermediary).2

5. (5)

   An insurance intermediary must notify the FCA if the firm forgoes commission or gives a cash or cash-equivalent incentive (within the meaning of ICOBS 6B.2.12R) on the gross price set by the insurer on either or both of more than 25% of the home insurance policies or more than 25% of the motor insurance policies sold by the firm in a reporting period.2

A pricing information report must contain pricing information set out in SUP 16.28.11R (core pricing information for the core product ), SUP 16.28.12R (additional claims-related information for the core product) and SUP 16.28.13R (pricing information for related additional products and fees) as follows:

1. (1)

   the information must be completed separately in respect of each firm’s home insurance and motor insurance business;

2. (2)

   where a firm has a multi-product policy which includes both home insurance and motor insurance in a single policy, that policy should be split between home insurance and motor insurance and reported as two separate policies.

3. (3)

   the information in SUP 16.28.11R and SUP 16.28.12R must be provided on an aggregated basis for each of the following product types in a firm’s motor insurance business, including the closed books which must also be separately disclosed in (11) below:

   1. (a)

      car;

   2. (b)

      motorcycles, including tricycles; and

   3. (c)

      other (being product types not included in (a) or (b));

4. (4)

   the information in SUP 16.28.11R and SUP 16.28.12R must be provided on an aggregated basis for each of the following product types in a firm’s home insurance business, including the closed books which must also be separately disclosed in (11) below:

   1. (a)

      buildings only;

   2. (b)

      contents only; and

   3. (c)

      buildings and contents;

5. (5)

   in respect of the information in SUP 16.28.11R only, the aggregated information for each of the categories set out in (3) and (4) must be further split out into products sold via the following types of channel:

   1. (a)

      direct (aggregated across all direct sales including telephone, internet and branch);

   2. (b)

      price comparison websites (aggregated across all price comparison websites);

   3. (c)

      intermediated (aggregated across sales made through insurance intermediaries, excluding those sales included in (b) or (d); and

   4. (d)

      affinity/partnership schemes (aggregated across all such schemes);

6. (6)

   in splitting the information in SUP 16.28.11R on products into the types of channel via which they were sold in accordance with (5), products should be allocated to the type of channel used to determine the channel for the purposes of determining the equivalent new business price for that customer in accordance with ICOBS 6B.2.5R;

7. (7)

   where a price-setting intermediary makes sales directly to consumers, the information in SUP 16.28.11R on these products should be allocated to the direct sales type of channel in (5)(a), not the intermediated type of channel in (5)(c);

8. (8)

   the pricing information in SUP 16.28.11R for each type of channel in (5) must be further split into categories representing the tenure of the customers (broken down by the year of tenure);

9. (9)

   insurers and managing agents must report the required information in SUP 16.28.11R for each channel and tenure combination as derived from (5) and (8) separately for gross-rated business and net-rated business;

10. (10)

    in respect of the information in SUP 16.28.12R only, the aggregated information for each of the categories set out in (3) and (4) must be reported as the total aggregated for each product type3 (no split between type of channel or tenure);

11. (11)

    pricing information in SUP 16.28.11R only must also be provided separately, split into the type of home insurance product or motor insurance product (where relevant) for each segment of business that:

    1. (a)

       is a closed book containing 10,000 policies or more; or

    2. (b)

       comprises all other closed books which are not reported in (a) above, on an aggregated basis;

12. (12)

    the pricing information for closed books in (11) must be further split out into categories representing the tenure of customers (broken down by year of tenure);

13. (13)

    pricing information in SUP 16.28.13R for related additional products must be split out between each of the following:

    1. (a)

       retail premium finance; and

    2. (b)

       add-on policies;

14. (14)

    pricing information in SUP 16.28.13R for fees must be split out between each of the following:

    1. (a)

       pre-contractual fees; and

    2. (b)

       post-contractual fees; and

15. (15)

    the pricing information in (13) and (14) must then be further split into categories representing the tenure of the customers (broken down by the year of tenure).1

The core pricing information for the core product is:

1. (1)

   total gross written premium;

2. (2)

   total net-rated written premium (net-rated business only);

3. (3)

   average gross premium;

4. (4)

   average net-rated premium (net-rated business only);

5. (5)

   average prior year gross premium;

6. (6)

   number of policies in force at the end of the reporting period;

7. (7)

   total number of policies incepted or renewed;

8. (8)

   expected claims ratio;

9. (9)

   expected claims cost; and

10. (10)

    proportion of customers where the expected claims ratio falls within each of the following bandings:

    1. (a)

       greater than 0% but less than or equal to 10%;

    2. (b)

       greater than 10% but less than or equal to 20%;

    3. (c)

       greater than 20% but less than or equal to 30%;

    4. (d)

       greater than 30% but less than or equal to 40%;

    5. (e)

       greater than 40% but less than or equal to 50%;

    6. (f)

       greater than 50% but less than or equal to 60%;

    7. (g)

       greater than 60% but less than or equal to 70%;

    8. (h)

       greater than 70% but less than or equal to 80%; and

    9. (i)

       greater than 80%.

The additional claims-related information for the core product is:

1. (1)

   total earned premium;

2. (2)

   average earned premium;

3. (3)

   gross incurred claims ratio;

4. (4)

   developed gross incurred claims ratio for the claim-related reporting period 1 year prior to the current such period;

5. (5)

   developed gross incurred claims ratio for the claim-related reporting period 2 years prior to the current such period;

6. (6)

   developed gross incurred claims ratio for the claim-related reporting period 3 years prior to the current such period;

7. (7)

   total prior year’s reserve release; and

8. (8)

   total prior year’s reserve strengthening.

The pricing information for related additional products and pre- and post-contractual fees that are not part of the gross premium for the core product is:

1. (1)

   the total charged for retail premium finance (including retail premium finance on add-on policies);

2. (2)

   the number of customers with retail premium finance;

3. (3)

   the APR range;

4. (4)

   the total gross written premiums for add-on policies incepted or renewed;

5. (5)

   the number of add-on policies incepted or renewed;

6. (6)

   the total pre-contractual fees paid by all customers;

7. (7)

   the average pre-contractual fees across those customers who incurred fees;

8. (8)

   the total post-contractual fees paid by all customers; and

9. (9)

   the average post-contractual fees across those customers who incurred fees.

The pricing information report containing the information in SUP 16.28.11R and SUP 16.28.13R in relation to the reporting period (which begins on 1 January and ends on 31 December of the immediately preceding calendar year) must be submitted annually on or before 31 March.

The pricing information report containing the information in SUP 16.28.12R in relation to the claims-related reporting period must be submitted either:

1. (1)

   where a firm’s claims-related reporting period is the reporting period, annually on or before 31 March; or

2. (2)

   where a firm’s claims-related reporting period is not the reporting period, annually on the date which is 3 months following the end of the claims-related reporting period.

A pricing information report must be completed using the forms4 and format set out in SUP 16 Annex 49AR, using the notes for completion in SUP 16 Annex 49BG.

The report must be submitted online through the appropriate systems accessible from the FCA’s website.

A pricing information report will not be considered as submitted to the FCA unless all the mandatory reporting fields set out in SUP 16 Annex 49AR have been completed correctly and the report has been accepted by the relevant FCA reporting system.