Fair Value Assessment for Insurance Products

Support for insurers, MGAs, brokers and appointed representative networks in developing, reviewing and evidencing fair value assessments under Consumer Duty.

The FCA expects manufacturers and distributors of insurance products to be able to demonstrate that the products they offer provide fair value to customers throughout their lifecycle. Firms must have robust governance arrangements in place to assess whether the relationship between price, benefits, limitations and service continues to deliver good outcomes for the target market.

A fair value assessment is no longer simply a regulatory exercise. It is a critical component of effective product governance and Consumer Duty compliance, helping firms identify potential customer harm, challenge distribution arrangements and ensure products remain suitable and competitive.

What Does a Fair Value Assessment Involve?

A fair value assessment should consider whether the overall package delivered to the customer is reasonable when compared with the total price paid.

Firms should assess:

  • Product features and benefits
  • Policy exclusions, limitations and excesses
  • Claims experience and claims acceptance rates
  • Distribution and administration costs
  • Commission and remuneration arrangements
  • Customer service standards and support
  • Target market suitability
  • Customer vulnerability considerations
  • Complaints and customer feedback
  • Renewal outcomes and persistency trends

The assessment should be evidence-based and supported by meaningful management information, rather than relying solely on assumptions, historic performance or the absence of complaints.

How Can ICS Help?

ICS supports insurers, MGAs, brokers and appointed representative networks in developing and documenting robust fair value assessment frameworks.

Our consultants can help firms:

  • Develop product governance frameworks.
  • Create board and committee reporting.
  • Review remuneration and distribution arrangements.
  • Support the analysis of claims, complaints & customer outcome data.
  • Identify Consumer Duty risks.
  • Prepare for FCA supervisory engagement.
  • Produce evidential documentation and audit trails.

Whether you require an independent review of an existing assessment or a complete fair value framework, we can help ensure your approach is proportionate, practical and regulator-ready.

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Common FCA Areas of Challenge

The FCA will often look beyond whether a firm has completed an assessment and focus on whether the firm can evidence meaningful review, challenge and action.

The FCA often focuses on whether firms can demonstrate:

  • Why a product represents fair value for its target market
  • How remuneration arrangements impact customer outcomes
  • Whether low claims frequencies indicate limited customer benefit
  • How vulnerable customer needs are considered
  • What action has been taken following poor customer outcomes
  • How distribution chains affect product costs and value
  • Whether product reviews result in meaningful challenge and action

Many firms have governance structures in place but struggle to evidence the rationale behind decisions or demonstrate that outcomes are being actively monitored.

Need help? Get in touch today and talk to one of our FCA compliance consultants.

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Get your FREE Fair Value Assessment Checklist!

Not sure whether your current approach would withstand FCA scrutiny?

Request our free Fair Value Assessment Checklist to review whether your firm can evidence the key areas expected within a robust fair value assessment framework.

  • Risk assessment for higher-risk products
  • Fair value assessment methodology
  • Target market considerations
  • Claims and complaints analysis
  • Commission and remuneration oversight
  • Vulnerable customer considerations
  • Distribution channels and sales methods
  • Information from third parties
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Fair Value Assessment FAQs

A fair value assessment is a structured review of whether an insurance product provides reasonable value to customers when compared with the total price paid.

It should consider the relationship between the product’s price, benefits, limitations, service standards, target market and customer outcomes. Under Consumer Duty, firms are expected to assess fair value not only at launch, but throughout the product lifecycle.

Manufacturers and distributors of insurance products are expected to be able to demonstrate that the products they offer continue to provide fair value to customers. This includes insurers, MGAs, brokers and appointed representative networks involved in the design, distribution or oversight of insurance products.

A fair value assessment should consider whether the overall package delivered to the customer is reasonable when compared with the total price paid.

This may include product features and benefits, policy exclusions, claims experience, distribution costs, commission and remuneration arrangements, customer service standards, target market suitability, vulnerable customer considerations, complaints and renewal outcomes.

Fair value assessments should not be treated as a one-off exercise. Firms should monitor product value and customer outcomes on an ongoing basis, particularly where products, services or distribution arrangements may result in poor outcomes.

Reviews may also be required where there are material changes to pricing, cover, distribution arrangements, claims experience, complaints levels or customer behaviour.

Firms should be able to evidence how they have assessed product value, monitored outcomes and challenged or escalated concerns.

This may include management information, Board and committee reporting, target market assessments, claims and complaints analysis, remuneration reviews, distribution oversight, governance records and audit trails showing what action has been taken where poor outcomes or customer harm risks have been identified.

Yes. ICS can review existing fair value assessments, product governance frameworks and supporting evidence to help identify gaps or areas requiring further challenge.

This may include reviewing Board reporting, remuneration and distribution arrangements, claims and complaints data, Consumer Duty risks and the audit trails used to evidence decision-making.

Yes. ICS can support firms in developing and documenting fair value assessment frameworks that are proportionate, practical and aligned with regulatory expectations.

Support can include product governance frameworks, Board and committee reporting, management information reviews, Consumer Duty risk identification, FCA supervisory preparation and evidential documentation.

No. The checklist is designed to help firms review whether they have considered key areas of fair value assessment and product governance.

It should be used as a practical starting point, not as a substitute for tailored compliance advice. Firms with complex products, distribution arrangements or identified customer outcome concerns may benefit from independent review or specialist support.

Book a FREE initial consultation

Book a free 30-minute consultation with one of our insurance compliance experts and get clear, practical guidance on your next steps.

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How Can We Help?

We offer up to two initial consultations without charge, to determine the exact nature of your challenges/concerns. If you would like to try out some of our compliance services before committing we can offer a demo of our Compliance Portal, samples of our Hot TopICS or attendance at one of our Webinars. Thereafter we will agree which of our services are most likely to help you most with your regulatory requirements, agree a package of support (or a one-off project) and send a detailed proposal for your approval. Before, or after, you decide to go ahead, we will introduce you to the Consultant(s) who will agree a diary of contact at times to suit you both.

Please call us on 01892 539600, email us at enquiries(at)insurancecompliance.co.uk, or send us a message using the form for more information or to make an enquiry about any of our compliance services.

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