Product Oversight and Governance
The Financial Conduct Authority (FCA) has in recent years significantly increased its focus on product value and consumer protection. Subsequently, they have implemented specific regulatory requirements.
These requirements apply to both manufacturers and distributors of insurance products for commercial, consumer, and personal lines of business.
The requirements place the onus on the operations and controls of both the manufacturer and the distributor(s) to ensure customers receive fair value for all products and services, and that good customer outcomes are delivered.
HSB has reviewed its own product approval process in line with these requirements to demonstrate commitment to achieving the best customer outcomes. This process covers the entire product lifecycle, from new product development to product review inclusive of the following elements:
- Product design: Extensive research of the product concept is undertaken to identify an appropriate target market. Engagement with our Product Innovation Group also ensures innovation drives our product development. Customer type, distribution channel, charging structure, as well as the wider market and legal developments, are also identified and considered.
- Product testing: A clear mapping of the customer journey is undertaken and reviewed to ensure clear and appropriate information is available to distributors and customers. Risk assessments and regulatory reviews are undertaken to ensure fairness to customers, and that any risks to the identified target market are appropriately managed.
- Product approval: The design and testing, inclusive of pricing, distribution strategy, and good customer outcomes form part of the approval process. Post-launch, any significant adaptations to a product will trigger a re-approval of the product.
- Distribution: The distribution strategy inclusive of product marketing, training, and technical support is designed to ensure product knowledge is readily available to distributors. The strategy is assessed as part of regular reviews post-launch.
- Monitoring: Post launch, the overall product performance is interrogated and is subject to an annual assessment, in conjunction with co-manufacturers where applicable, to ensure customers receive fair value. This includes the monitoring of claims and complaints data, systems reviews, and review of customer feedback to identify any issues or barriers to target market suitability and/or good customer outcomes.
The process is overseen by the Chief Underwriting Officer and managed by our dedicated Product Management Team who collaborate with stakeholders from our underwriting, compliance and distribution teams within our organisation to ensure that our products offer fair value and provide the expected good customer outcomes; ensuring that appropriate remedial action is implemented where necessary.
We have a dedicated central place for our distributors to obtain details on our Target Market, Fair Value Assessment outcomes and Consumer Duty monitoring. This can be accessed via contacting your local Business Development Manager.
We also recognise that customers who meet the FCA classification of consumer have the right to opt out of auto-renewing their policy. We currently do not offer auto-renewal of any product which targets consumers.