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The Financial Conduct Authority (FCA) has confirmed that several firms have been permitted to recommence their sales of Guaranteed Asset Protection (GAP) insurance, following action by the regulator to improve fair value.

To restart sales, firms need to demonstrate that their GAP products provide fair value to customers, in line with FCA rules.  

Firms that have resumed sales of GAP insurance have done so with materially lower levels of commission being paid out to those selling GAP, improving value for customers.  

Following this action, customers purchasing GAP insurance can expect to receive better value cover which is suited to their needs, and receive better outcomes.  

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said:  

'We took action when our data showed that customers were not getting a fair deal.  

'I’m pleased that, following constructive engagement with industry, a significant proportion of the market is now able to restart sales.  

'GAP insurance can provide a useful service to customers and we continue to work with the rest of the market to address our concerns.'

In February the FCA announced that multiple insurance firms had agreed to pause sales of GAP insurance, following a request from the regulator. This was followed by a second tranche of engagement in March with the rest of the market  

In 2022, according to the FCA’s value measures data, there were over 2.4 million GAP policies in force.  

This data showed that in 2022 only 6% of the amount customers paid in premiums for GAP insurance was paid out in the claims, with some firms paying out as much as 70% of the value of insurance premiums in commission to parties involved in selling GAP insurance.  

The FCA will continue to consider the remaining firms’ proposals to improve value for customers.  

Under the Consumer Duty, firms must provide fair value to customers, ensure that products and services meet their needs, and provide good customer service.

Notes to editors

1. The FCA has agreed that the following firms can recommence selling GAP insurance:  

• Fortegra Europe Insurance Company Ltd
• Motors Insurance Company Ltd 
• Amtrust Europe Ltd
• Financial & Legal Insurance Company Limited 

2. The FCA’s decision to allow these firms to continue selling GAP reflects its assessment at a specific point in time. The FCA expects firms to regularly assess whether their products are providing fair value to customers and update their approach where appropriate.  

3. On 9 February 2024, the FCA announced that multiple insurance firms had agreed to pause sales of Guaranteed Asset Protection (GAP) insurance.  

4. On 4 March 2024, the FCA confirmed that it had sent further requests to the remaining firms to pause sales of GAP insurance, in a second tranche of engagement.

5. Read more about our insurance value measures data.

6. Find out more information about the FCA.