City regulators fired a warning shot at the insurance industry on Wednesday over fears that high commissions for middlemen are leading to rip-off prices.
The Financial Conduct Authority warned it would clamp down on general insurers who failed to show how their products were value for money.
The FCA said that in one example a £360 car insurance add-on sold by a motor dealer led to a £213 commission to the dealership with only £81 paid to the insurer as a premium — a 60% commission rate.
The FCA’s Jonathan Davidson said there was a culture in some parts of general insurance “which pays insufficient regard to customer outcomes”.
Last month Carphone Warehouse was fined £29 million for mis-selling mobile phone insurance and Liberty Mutual Insurance Europe £5 million for failures in claims handling.
