The Financial Conduct Authority released a new Policy Statement on insurance renewals on 10 August. The Statement follows a consultation the regulator carried out in December 2015, designed to improve levels of customer engagement when it comes to renewing insurance policies.
The regulator felt that a lack of engagement from customers, and the way customers were treated when renewing their policies, led to a lack of competition in the market.
Because consumers weren’t engaging with the letters and emails their insurers sent out, few were checking their cover levels and costs, or shopping around for the best deal.
The new guidelines state that insurers should increase transparency and improve customer engagement for customers due to renew. This includes requirements to:
- disclose last year’s premium at each renewal
- include text to encourage consumers to check their cover and shop around for the best deal
- identify consumers who have renewed with them four consecutive times, and give these consumers an additional prescribed message encouraging them to shop around
Guidance is also included on how firms can maintain records to demonstrate compliance.
The full Policy Statement can be read here.
All insurance firms need to comply with the new requirements by 1 April 2017. All firms should read the detail of the requirements, which include information on:
- Disclosures and disclaimers (a topic we cover in more detail here) – particularly in relation to size and prominence.
- How companies should present the ‘shopping around’ message to encourage customers to make comparisons and achieve the best policy.
- Record-keeping recommendations – how to ensure records of premiums comply.
The need for transparency and greater customer engagement isn’t a new message for the FCA. It echoes the regulator’s requirement that financial promotions are ‘fair, clear and not misleading’, and the need to treat customers fairly, which we look at in more detail in this blog.
All insurance providers need to review their renewal communications and identify what changes they need to make to comply with the new requirements. It will be important to assess all the communications you send to your customers approaching their renewal date to make sure no non-compliant letters, emails or other promotions slip through the net.
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