James Thynne, Account Director at Basil Fry, explains how the company’s new MoveProtect protection solution is reshaping insurance cover in the removals industry.
The removals and storage industry runs on trust. Customers entrust removers with their cherished possessions, expecting them to be handled with care, whilst also expecting fair compensation if something goes wrong.
For many years, some removal companies have offered their customers this peace of mind by arranging insurance under an “open cover” arrangement. By purchasing an annual policy, removal companies could provide insurance for individual moves and charge customers accordingly. This evolved into a valuable additional revenue stream alongside typical removal costs.
However, recent regulatory reforms have changed the landscape significantly. In response, Basil Fry & Company introduced MoveProtect; a legally compliant, contract-based protection solution tailored to modern requirements.
The regulatory landscape: a lot to unpack
The Financial Conduct Authority (FCA) is the UK’s financial regulator. Its responsibilities include protecting consumers, ensuring market integrity and promoting competition. In 2019, the FCA launched product governance reforms requiring insurers to ensure their products deliver fair value by evaluating price, coverage structure and claims handling.
There was particular concern with distribution chains, where companies (such as removers) were involved with the distribution of insurance, whilst not being regulated by the FCA. This gave rise to the potential for customers to be overcharged for insurance, due to a lack of control and oversight.
The updated guidance clarified what insurers expect from all parties involved in distribution chains. Where mark-ups are high or value unclear, insurers must act or risk FCA repercussions. As a result, many insurers have withdrawn from supporting open cover arrangements completely.
This trend isn’t unique to removals. For example, gap insurance, commonly sold through car dealers, was temporarily suspended after FCA intervention revealed that distributors were retaining up to 70% of premiums with little value returned to customers.
An obstacle for UK-based removers selling insurance
Customer demand for protection hasn’t diminished. It’s intrinsic to the nature of removals that damage can occur, regardless of how well the remover does their job. Accordingly, offering customers protection against such risks is fundamental to the service offering of a remover. At the same time, the income from offering this protection has historically helped removal companies balance their overall costs, supporting fair pricing for the customer while ensuring the service remains sustainable.
The regulatory changes do not technically prevent removal contractors from arranging insurance to customers. However, they do require additional controls and reporting, making the process impractical for most removal companies whose focus is - rightly - on securing work and delivering services in an already challenging market.
This problem is compounded by the effect which the regulation changes have had on the market itself ...
Photo: The Basil Fry management team.
Click here to read the full story in The Mover magazine.