Fair value and the protection distributor
Fair value is not only about the premium. It is about what the customer actually receives across the life of the policy.
The price and value outcome
The Consumer Duty requires firms to ensure products and services provide fair value to retail customers. The relationship between the price the customer pays and the benefits they can reasonably expect has to be reasonable. Insurers, as manufacturers, assess the value of their products. Distributors must also consider whether their own role, including the commission and fees they receive, is consistent with the product continuing to provide fair value.
How distribution affects value
Distribution costs are part of what the customer pays for. If a distributor's remuneration is high relative to the service it provides, or if its activity leads to poor outcomes such as unsuitable cover or unnecessary replacements, the product may no longer represent fair value for the customers it reaches through that channel. Insurers' product governance rules require them to consider this, and to share relevant information with distributors.
What customers receive after the sale
Value includes more than the payout on a claim. It includes the advice, the support to keep cover relevant, help with administration and claims, and the extra benefits many protection policies now include, such as remote GP access, counselling or second medical opinions. If customers never learn about these benefits, or never get help after the sale, the value they receive is lower than it could be.
Post-sale engagement as evidence of value
Distributors can strengthen their contribution to fair value by showing what they do after the sale: checking that customers received and understood their cover, fixing problems, reminding customers of benefits, following up failed payments and offering reviews when circumstances change. Records of this activity, and of the outcomes it produces, are direct evidence of the service behind the remuneration.
Indicators worth monitoring
Cancellation and lapse rates by cohort, especially early lapses. The proportion of customers who confirm they understand their cover. Issues raised and resolved after the sale. Uptake of support benefits. Complaint themes. Claims outcomes where available. Taken together, these show whether customers are receiving the value the product was designed to deliver.
Working with insurers
Insurers need information from distributors to complete their fair value assessments, and distributors need information from insurers to understand the products they sell. Sharing post-sale data, such as recurring issues with documents or benefits customers do not know about, helps both sides. It also helps insurers identify where the distribution channel is adding value.
Benefits customers do not use
Many protection policies include support services that customers can use without making a claim. Low awareness reduces the value customers receive. Short, relevant reminders of these benefits, sent at appropriate moments, can increase awareness and use. Across Adviser.ai's platform, benefit reminder journeys have delivered engagement at a low cost per customer while reminding them why their policy matters.
Bringing it together
Fair value is a shared responsibility across the distribution chain. For distributors, the most persuasive evidence is not a statement that remuneration is reasonable, but data showing that customers who come through the channel are well advised, well supported and keep cover that meets their needs. Post-sale engagement is one of the most practical ways to generate that evidence.
Questions for the board
Do we know what customers who come through our channel actually receive after the sale? Can we show that our remuneration is matched by advice and support that improve outcomes? Are there groups of customers, such as those from particular lead sources, who receive less value? Do we share what we learn with insurers? The answers form the core of a distributor's fair value position.
Early lapses and value
A policy that lapses within months has delivered very little value to the customer, who paid premiums for cover they no longer have, and the commission may still have been substantial relative to the premiums paid. High early lapse rates in a channel are therefore a fair value concern as well as a commercial one. Reducing them strengthens both.
A practical starting point
List what the firm does for customers after the sale, with the evidence for each: post-sale checks completed, issues resolved, failed payments recovered, reviews offered, benefits explained. Set that alongside persistency and complaint data. Where a step is missing or weak, that is the clearest place to strengthen both outcomes and the firm's fair value position.
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FCA: PRIN 2A, the Consumer Duty
FCA: FG22/5, final guidance on the Consumer Duty
FCA Handbook: PROD, product intervention and governance
Adviser.ai figures are drawn from anonymised client data and are illustrative. Results vary by firm, product and implementation.
Last updated 27 October 2026