Good proposition design can deliver the benefits for consumers that the Financial Conduct Authority seeks with its fair value-based rules.
However, pricing benefits created by bundling products need to be thought through carefully in terms of suitability and targeting aimed at the right consumer groups to ensure fairness.
Too often, the value equation for bundled products is poorly weighted, favouring the firm over the consumer rather than being more balanced. Also, the mechanics of working out the value provided is complicated and opaque. Often, deliberately designed to be this way.
Bundling benefits whilst delivering fair value is a challenge that the banking sector has struggled to deliver over the past decade consistently. As a result, FCA fines related to fair value and poor transparency are significant.
A key question for 2002 will be whether General Insurers learn from banking regarding the fair value and bundling products and services as the new General Insurance Pricing Practices come into force.
Or, will history repeat itself across General Insurance and ‘what is past is but prologue’ as Shakespeare writes in the Tempest.