It can be difficult for insurers, underwriting agencies, insurance brokers and other distributors to consistently meet compliance obligations to customers especially when processes are not automated.
A simple way to think about compliance obligations is to align them to the customer journey. This can be reduced to a 1 page ready-reckoner for all sales staff, account executives, business development managers & authorised representatives.
Pre-appointment or pre-purchase
During this stage of the customer journey the customer is considering their insurance needs and may engage an insurance broker or shop around online
Insurance brokers, who are NIBA members and subscribe to the Insurance Brokers Code of practice, must provide a Terms of engagement to a prospective client who agrees to engage the broker.
Underwriting Agencies or Insurers selling direct must not engage in misleading or deceptive conduct, whether through their website, advertising or otherwise & comply with the hawking prohibitions in respect of retail clients. These obligations also apply to Insurance Brokers
Referrers ofAgencies, Insurers or Brokers can only ‘refer’ the client to the financial service provider and must disclose any payment for the referral.
All licensees & ARs must be efficient, honest & fair when providing their financial services. Insurers and their distributors, under the GI Code, must be honest, efficient, fair, transparent & timely in all dealings with the customer. NIBA Insurance Brokes must act honestly and with integrity in all dealings with clients under the Insurance Brokers Code.
All staff must be trained and competent to provide the financial services.
Purchasing general insurance products
Before providing the financial services, a licensee or authorised representative must provide a FSG , if the services are to be provided to a Retail cleint. Having said that, its best practice to provide a FSG to all clients.
Before providing any financial product advice, a general advice warning must be provided to a retail client if providing general advice and brokers providing personal advice must be aware of the modified best interest duty for general insurance & provide a Statement of advice for sickness & accident insurance.
In addition for retail product distribution, insurers and Agency’s must ensure that a TMD is available, usually on their website, and the direct sales process is aligned to the TMD. Brokers must ensure they distribute the insurance products in accordance with the TMD.
The sales process
Where relevant, the deferred sales-model for add-on insurance must be complied with where an insurance product is sold or offered for sale at the time of purchasing a primary product and an insurance product exemption does not apply.
At the start of the sales process the underwriting agency or insurer must determine whether the general insurance product is a consumer insurance contract, if so, the insured’s duty to take reasonable care not to make a misrepresentation applies otherwise the duty of disclosureapplies. Brokers should note to take care when commencing renewal activities to clarify with the agency or insurer whether the product is being treated as a consumer insurance contract (in addition to those consumer insurance contracts included in the regulations) and if so, only provide information that responds to the underwriting questions being asked.
At the time of offer or sale, a PDS must be provided to a retail client.
For standard insurance contracts, such as a PDS for a retail client or a policy wording for a small business, the unfair contract termsprovisions must be met.
NIBA Insurance Brokers must disclose their remuneration in dollar termsto Retail clients
An insurer or their distributors must not engage in pressure selling.
Post-sales
In respect of general insurance products provided to Retail clients a 14-day cooling off period applies provided a claim has not be made or the cover is not for a short-term policy period. During the cooling-off period the retail client may return the insurance product and must be provided with a full refund.
Do not hesitate to contact me for assistance with your compliance obligations.