Ask a pricing team whether their product offers fair value and the answer will almost always be yes. Ask them to prove it and the conversation gets harder. Which version of the model was live last spring? Why did that rate move? Could they show how one particular customer's premium was worked out?
The FCA's Consumer Duty turned those questions from good practice into something firms need to be able to answer. This post looks at what the rules expect of pricing and the records that make the answer easy.
What the rules ask for
Two pieces of FCA regulation matter most for general insurance pricing in the UK.
The Consumer Duty sets a higher standard of care for retail customers and asks firms to deliver good outcomes in four areas: products and services, price and value, consumer understanding and consumer support. The price and value outcome is the one that lands on the pricing team. Firms need to assess whether the price a customer pays is reasonable for what they get, and to act if it isn't. The responsibility is shared along the chain, so an MGA and the insurer behind it each have a part to play.
The general insurance pricing practices rules, in force since January 2022, stopped firms charging renewing home and motor customers more than they would charge an equivalent new customer through the same channel. Alongside that came stronger product governance, including regular fair value assessments, and reporting so firms can show they are complying.
Put simply, you need to know what your model charges, why it charges it, and whether the result is fair.
Fair value is judged on evidence
Fair value is assessed at product level, but the evidence for it comes out of the pricing process itself. If that process leaves good records behind, the assessment is quicker and much easier to stand behind. The records worth having:
- Every version of the model, with when it went live and when it was replaced.
- The story of each change: what moved, why, and who signed it off.
- Proof the model does what it should, in the form of test cases with expected results that run against every version.
- Renewal checks, for products the renewal rules cover, showing a renewing customer isn't priced above an equivalent new one through the same channel.
- The working behind any single quote: its inputs, the factors applied and the result, so a complaint can be answered with facts.
- Ongoing monitoring of prices and outcomes across customer groups, so an unexpected pattern is caught early.
Let the system keep the records
The firms that find this easy are usually the ones whose pricing system produces these records as a side effect, rather than someone assembling them by hand before an audit.
Versions. If every change creates a new version and every quote stores the version that priced it, "what were we charging in March, and why?" has a precise answer.
Tests. A saved test suite turns "we tried a few quotes" into a documented check that runs on every change. For renewal pricing, you can build pairs of tests, one renewal and one equivalent new business case, and check that the renewal result is never the higher of the two. Our guide to testing insurance pricing models covers how to put a suite together.
Traces. A full record of how a quote was priced, showing each input, lookup and formula, gives complaints teams and internal audit something concrete to work from.
Approvals. A record of who approved each version, and when, supports the governance side of both the Duty and the product governance rules.
Where firms usually fall short
The same gaps come up again and again:
- Pricing held in spreadsheets, with no reliable record of what was live when.
- Rate changes made straight into production with no formal sign-off.
- No routine check of renewal prices against new business prices.
- Quote records that keep the premium but not how it was reached.
- More than one copy of the pricing logic across channels, each drifting from the others.
Every one of these comes back to the same fix: a single, versioned model that serves every channel and keeps its own evidence. If a spreadsheet is the problem, see replacing a spreadsheet rater.
How Swallow helps
In Swallow, every change goes through a version that moves from draft to approved to published. Your team's roles decide who can approve, and every step is logged with who did it and when. Tests are saved on each version, so the suite can be run before anyone approves it. Every quote is saved with the version that priced it, and the API can price a quote against the version that was live on a given date, so you can see what a customer would have been charged at the time. Add debug=true and a quote returns its full trace.
Conversations, files and test results are stored against each version, and Swallow's AI can draft version summaries and governance reports for compliance, finance and underwriting. Read more on the Process page, or talk to our team.
This post is general information, not legal advice. Check the FCA's current rules and guidance as they apply to your own products.
