Thursday, 12 June 2014

Insurers still under the spotlight with the sale of add-ons

The Competition and Markets Authority (CMA) - (previously the competition commissioner) has advised of some of their early findings and recommendations that arise from their review of the "dysfunctional" way the motor insurance market operates.

Their full report with recommendations is expected this September after further consultation.

The watchdog has informed the Financial Conduct Authority (the governing body of the insurance industry) to look at how insurers inform their customers about motor add-on products.

A common motor insurance add-on product is motor legal protection insurance (MLP) or legal expenses insurance (LEI)

Alasdair Smith, chair of the private motor insurance investigation group and CMA deputy panel chair, said: "There are over 25 million privately registered cars in the UK and we think these changes will benefit motorists who are currently paying higher premiums as a result of the problems we've found."

Smith concluded: "We also find that the way motor insurance-related add-on products are sold makes it hard for customers to obtain the best value.
"We would like the FCA, as part of its on-going work looking at add-ons across all insurance products, to consider how drivers could be better informed in making their choices."

Free Motor Legal welcome these findings and recommendations as they will drive a better deal for consumers and also make them better aware of what products exist and make them better informed to make a decision whether to purchase an add-on, such as motor legal protection. For too long insurers have simply specified motor legal protection by default, requiring the customer to "opt out" of having the additional cover, usually priced at around £30 per vehicle/ policy.

The FCA has previously wrapped the knuckles of insurers for this practice, the price comparison sites in particular and they are now told that a customer has to "opt in" to such additional cover, rather than it appear as a default.

Free Motor Legal also believes that the way the add-ons are sold, typically packaged in at the point of sale of the main motor insurance policy, has often lead to people just agreeing to go along with the cover, rather than looking for a stand alone solution.

There are now more stand alone providers of motor legal protection in the marketplace, but they charge for the product and some of them even still want a deduction to be taken from the customer in the event they make a compensation claim when using the appointed lawyers.

Free Motor Legal members do not get charged for joining and if they pursue an injury claim, they keep 100% of their compensation - Guaranteed! No deduction from compensation and no "success fee" charged.

People still ask the question, "do I need motor legal protection?" We say, no you don't, but you do need Free Motor Legal

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