Shelley Robertson, Skandia One welcome aspect covered is claims handling. Not so much the day-to-d...
Shelley Robertson, Skandia
One welcome aspect covered is claims handling. Not so much the day-to-day issues, but more that customers should be aware of an insurer's claims philosophy and process. For example, the paper cites one market viewed as having a slow and inefficient claims process. Skandia identified the importance of explaining to customers about how its claims process works and how long it should take and we published a claims guide which covers these points. We would welcome any companies that follow suit.
Ron Wheatcroft, Swiss Re
CP160 proposes that CI, IP, PMI and LTC insurance should be treated as higher risk than other protection products. The reasons suggested for this categorisation and, consequently, higher regulatory standards for distributors, include product complexity ' increasing the likelihood of an unsuitable or poor value policy ' and difficulty switching policies and/or providers.
Medical terminology can be complex and difficult for the layman to understand. In recognition, and to its credit, the industry has responded to the Office of Fair Trading's criticisms of health products by standardising CI and IP. But for many customers their household or other general insurance policy may contain complex terminology, causing confusion about the validity of a claim.
Furthermore, unlike long-term cover arrangements which, the FSA suggests, have the potential for greater customer detriment, it might be argued that consumer detriment is actually less, given that the customer enjoys continuity of cover if their health declines. Being able to switch insurers is fine, but is of little value where the insured's circumstances make it impossible to obtain cover. In addition, insurers' ability to withdraw short-term cover completely may be a far greater cause of detriment and, consequently, exclusion from the market.
Geoff Brown, BUPA
It is reassuring to see the FSA's suggestions do not move us too far away from the sound practicalities of existing self-regulation.
The Government and the FSA have stated credit will be given to firms with 'good standing' with the General Insurance Standards Council (GISC), or equivalent organisations. While we do not know precisely what this means, it is clear FSA authorisation will be a less problematic process for those who have already willingly embraced and been prepared to be measured against GISC requirements.
Nick Kirwan, Scottish Provident
The term 'higher risk' is used only in the context of being relative to products that are all low risk. The danger is the term itself ' higher risk ' might scare potential customers away from a valuable and necessary insurance provision. We would like to see this changed.
The risk profiling of products has been defined, however, the product types themselves have not. This means some products may fall into a black hole. It may be better to define those products that are lower risk so that any exceptions are higher risk.
It is good to see the requirement for a 'demands and needs' statement will be implemented in the simplest possible way. Standards for advising and selling will follow the 'adequate for need' EU Insurance Mediation Directive, which contrasts with the 'best advice' requirement under the current investments regime. However, advisers may want reassurance a future review will not retrospectively interpret this as meaning the same as 'best advice.' Further clarification about what this means is essential.
David Pippett, Institute of Financial Services
In product areas identified as 'higher risk,' the FSA is likely to consider more stringent requirements for advice and documentation and possibly compulsory qualifications. CP160 has parallels with other FSA consultations, specifically those for investment and mortgage advice. This will hopefully ensure appropriate risk-based regulatory requirements are available to financial services customers in all areas and those regulated will be able to avoid the problems of compliance with a number of varying regimes.
The benefits of training and competence schemes are recognised by the FSA. It is essential companies plan and develop training and education systems now so they satisfy the new training and competence regime.
