Findings of Managing General Agents Thematic Inspection and Motor Insurance Research released

• Managing General Agents (MGAs) must amend policy documentation to make it clear to consumers who their insurer is and where their insurer is located, i.e. its country of incorporation
• MGAs must formalise contingency plans to better protect consumers in the event of an insurer exiting the Irish market        
• Price (rather than insurer) drove consumer choice; consumers’ satisfaction with their current motor insurer was high; and consumer knowledge of who they were insured with was mixed

The Central Bank has published the outcome of a thematic inspection of retail intermediaries, which act as MGAs on behalf of motor insurers.

MGAs typically provide access to the Irish market for domestic and/or foreign-based insurers. This supervisory work was undertaken to better understand the Irish private motor MGA market, the way MGAs operate and their engagement with insurers and underlying retail intermediaries.

This was supported by consumer research (PDF 1.3MB) commissioned by the Central Bank, which sought to better understand consumers’ knowledge of the identity and location of their motor insurer, factors that influence motor insurance purchases more generally, and information on consumer satisfaction with the service received.

The main findings are:

Thematic inspection   

• Provision of Key Information: In general, consumers were not sufficiently made aware by the MGA of the name of their insurer and its country of incorporation (key information). In some instances, MGAs failed to adhere to the original deadline set by the Central Bank in May 2017 to fully implement the provision of key information changes to policy and associated documentation.

• Contingency Plans: While all inspected MGAs have contingency plans in place to deal with an insurer exiting the market, in a majority of cases, these plans were not formally documented.
• Preparedness for new Product Oversight and Governance (POG) Requirements: MGAs inspected were unable to demonstrate sufficient preparedness for the POG requirements subsequently introduced on 1 October 2018, particularly in relation to enhanced obligations when manufacturing and / or distributing products.

Consumer research

• Consumers’ knowledge of the identity of their motor insurance company was mixed: 59% of respondents stated that they checked the name of their insurer on their insurance quotation document. 76% stated that they knew the identity of their motor insurer. However, of these, 25% stated the name of a retail intermediary, indicating some degree of misunderstanding.
• Price, rather than the insurer, was the primary driver of choice: 79% said that price was the most important factor that influenced their last purchase of motor insurance. 49% said that the location of the insurer mattered to them (although less than half of these, (45%) indicated that a location outside Ireland might change their decision).
• Satisfaction with the service of current motor insurer was high and the majority stayed with their current provider at last renewal:
  - 90% stated they were ‘satisfied’ or ‘very satisfied’ with the service provided by their motor insurer, based on their last interaction with them; and
  - 58% renewed their motor insurance with the same insurer or retail intermediary at their last renewal, compared to 42% who switched to a different company.

As a result of the thematic inspection, formal supervisory requirements with specific timelines for remediation have been imposed on those MGAs where we have identified areas of concern. Where appropriate, the Central Bank will make full use of its supervisory powers up to and including enforcement action.

Director of Consumer Protection, Gráinne McEvoy, said:
“A key objective for the Central Bank is to ensure that regulated firms are fully compliant with their obligations and are treating their customers in a fair and transparent way. The findings from the thematic inspection and our consumer research has provided us with important information about the evolving nature of the MGA model and the importance for firms involved in this business model (i.e. insurers, MGAs and retail intermediaries) to work closely together to protect the best interests of consumers.

Consumers have a right to know exactly who they are buying insurance from and should be provided this information in a straightforward and simple way that avoids creating confusion or misunderstanding. This inspection shows that there is room for improvement and, as a result, we have required specific actions to be taken to ensure consumers’ interests are better protected."