3.3 Capitalising add-on insurance

As will be explained when dealing with other aspects of insurance and how it is sold, I consider that add-on insurance, including add-on insurance offered in connection with the sale of motor vehicles, should generally be sold under a deferred sales model. The detail of that model is discussed further in the course of dealing with other forms of insurance that may be said to be of low value to consumers.

One likely consequence of this change is that the premiums payable for policies subject to the deferred sales model could not be financed by the loan made to purchase the vehicle without specific adjustment of the loan arrangement. However, in my view, the potential inconvenience caused by this outcome is justified in light of the benefits to the consumer of moving to a deferred sales model.