Gap Insurance Sales Resume in UK After FCA Ban Lifted
After a temporary ban, Gap insurance sales have resumed in the UK. The Financial Conduct Authority (FCA) had halted sales in 2024 due to concerns about value for money, but some providers like Macys have now restarted, following changes in commission structures.
Gap insurance, which covers the difference between a car's purchase price and its market value in case of a write-off, has been praised as a crucial financial safeguard. Duncan McClure Fisher, founder of Carmax, a Gap insurance provider, highlights the importance of this cover given rapid vehicle depreciation, rising new car costs, spare parts shortages, and increased vehicle theft.
The FCA initially imposed restrictions in February 2024, citing low claim payouts (only 6% of premiums) and high commission payouts (up to 70%). However, in May 2024, the FCA allowed firms that reduced commissions to restart selling Gap insurance. Carmax reports that average claims payouts have significantly increased, from £1587 in 2021 to £5559 in 2024, and even exceed £20,000 for some electric vehicles.
Despite initial concerns, Gap insurance is back on the market, with providers like Macys arguing it's a necessity given increased write-offs due to repair costs and spare parts shortages. However, specific companies restarting sales remain unclear, as detailed search results are unavailable.
