Insurer CPP Group said this morning that it expects UK trading to be difficult next year because of a regulatory probe affecting new business.
Last year the Financial Services Authority announced it would look into the way that CPP sold protection against identity theft. The insurer said today that it had agreed a framework with the watchdog for the operation of its regulated UK entities.
Under this framework, restrictions on new sales of card protection and identity protection products will continue, and will also be extended to sales of mobile phone insurance.
CPP added that it has made a £24.9m provision for customer redress and to cover the costs of the regulator’s investigation.
“The combination of the decline in new retail business and impact of customer redress exercises will adversely affect revenue and renewal rates, particularly in 2013,” CPP said in an interim management statement.
“While performance during the remainder of 2012 will continue in line with recent trends, performance in 2013 is expected to be materially lower than 2012.”
Group revenue declined by six per cent over the third quarter, with renewal rates falling 0.6 per cent to 74.1 per cent, CPP said this morning. Live policies were down around 500,000 since the end of June.
City A.M. Reporter