There are just three months left for firms to complete their first round of product value reviews for existing general insurance (GI) products. Our previous blog in November 2021 discussed the task ahead for insurers, brokers and other distributors to achieve compliance with the Financial Conduct Authority’s (FCA) new Product Governance requirements in PS21/5. Since then, we’ve seen significant activity in the market including examples of products and distribution arrangements being enhanced to provide greater value to customers.

In this blog, we’ll cover:

  • Where the market is now including outcomes from our own market benchmarking; and
  • Three key areas of focus for firms including the next round of value reviews from October 2022 onwards, as well as the new Consumer Duty. Compliance with Consumer Duty is expected to be required by mid-2023 and firms need to leverage their work on Product Governance as part of this.

Where is the market now?
We undertook benchmarking of GI insurers and brokers during May 2022 focussed on understanding progress across the market, as well as key judgements reached by firms. We’re very grateful for the 31 responses and we set out examples of key insights below:

  • Percentage of value reviews completed: The market is undertaking significant numbers of product value reviews that should be enhancing outcomes for customers. Firms will be busy completing these reviews over the coming months, with the largest proportion of firms currently 20-40% of the way through their value reviews.

  • Number of products: We discussed in our previous blog the challenges around defining what a product is. We set out below the number of products that firms said they have, split by insurers and brokers. Brokers tend to have a greater number of products, which could be due to splitting products into greater numbers based on having different insurers.



  • Engagement with counterparties: Value reviews typically require engagement between insurers and brokers, for example to agree product roles, share data and communicate enhancements to increase value for customers. We found there is a varied amount of this engagement so far, with some firms having engaged with 75%-100% of counterparties, while some have engaged with under 25%.



Key areas of focus
We have identified three key areas of focus for the market if firms are to achieve compliance and provide good customer outcomes:

  • Enhancing outcomes and value for customers: Firms are now undertaking detailed value reviews including reviewing product coverage, costs to customers, distribution arrangements and associated data. These reviews can be complex and require significant judgement including on the different levers to enhance value, such as reducing customer cost and/or increasing product coverage. Firms should make sure there is appropriate governance over key judgements and a structure to consistently address potential or actual customer harm.

  • Getting ready to go again from October: Firms are planning their approach to undertaking the next round of value reviews from October 2022. Some are already working towards a sustainable solution, while others are sticking with a tactical manual approach for the coming months, before then looking at more sustainable solutions. Firms should now be considering how to make the next round of value reviews more efficient and automated using technology, such as Deloitte’s OneView: Product Governance solution. We also expect an evolution towards greater consistency across the market, which could be accelerated through a market solution.

  • Consumer DutyProduct Governance and value is a significant aspect of the Consumer Duty. Firms are analysing and interpreting the Consumer Duty requirements to understand what needs to be done to achieve compliance, with some firms having also started on making these enhancements. Firms who have not yet started should do so and as part of this, should clearly show how they have leveraged their Product Governance work to evidence compliance with key aspects of the Consumer Duty.

The market has made progress against these Product Governance requirements, with lots of work still to be done. The FCA has also confirmed this as an area of supervisory focus in its recent Portfolio Letters to intermediaries. Firms need to continue focussing on a sustainable solution, as well as also addressing the new Consumer Duty requirements. And as said in our previous blog, firms must remember the outcome is to enhance value for customers, which is an outcome that can be forgotten given the significant operational challenges involved in this topic.