"This could be due to the cost to serve a market, including marketing costs and staffing requirements, quality of business as measured by persistency and claims experience or any other of a number of factors.
"On the other side, distributors are at liberty to ask for a level of commission which fairly represents their cost to serve the market; it is not in their gift to determine what effect that may have on pricing."
He added that, of course, they must work closely with insurers to be certain fair value to the consumer is achieved and that, in line with consumer duty, any additional commission is justifiable.
Jeynes added: "As with all things, clarity and communication is key to customer understanding. People understand that, in all areas, products and prices differ and it isn’t unusual or unexpected for, say, digital purchases to offer savings versus face to face or telephony sales.
"Moreover, the advised/non-advised, telephony/non-telephony debate should be consigned to decades past and is a red herring.
"Modern insurers understand that within either camp there is high and low quality and varying degrees of customer outcome. This is where the focus should be, not on the method delivery."
Change to charter
The comments came after Lisa Sturley, Head of Market Interventions, Insurance Supervision at the FCA, gave a stirring keynote speech at a recent industry conference.
At the conference, from the consumer protection title Cover, Sturley said there were areas where the protection market could be failing consumers and causing detriment.
She urged manufacturing insurers to “monitor your distribution channels…and ensure fair value”, asking: "How well do you know your distributors? Are they aligned to your principles?
"And what are they doing to maintain your reputation and the consumer duty that you have worked so hard to implement?”
The PDG statement welcomed her comments, and added: "The PDG has long held the view that loaded premiums are unfair to consumers.
"The PDG through our Claims Charter, which almost all insurers have signed, has sought to improve the way insurers help those most in need of it.
"While payout rates remain strong, our members have been highlighting that particularly since the pandemic, the time to assess claims has worsened leaving already vulnerable claimants in an even more vulnerable position."
As a result, the PDG announced that this charter will evolve next year to include an analysis of assessment times.
simoney.kyriakou@ft.com
