Chapter 11

Question 1

How do you gain enough information to support a sale?

Answer 1

Build trust Which will encourage the customer to share information with you which will help you gain a fuller understanding of their needs. Creating a rapport will help the customer to relac and share more details.

Ask the right questions and probing the customers responses will help identify their needs and help with the presentation of the sale. Use open, probing and closed questions here.

Listen otherwise
-needs will be incorrectly analysed
-opportinities for selling products will be missed

Question 2

What 2 pieces of information are needed for a customer consultant to make a link between a customer and a product?

Answer 2

1) an in depth knowledge of the products and services that their organisation offers (including knowing the policy wording and how the features become benefits for the customer)
2) information on the customer and of their wants and needs (which usually has to be probed for an a skilled consultant can pick up on opportunities to cross sell)

Question 3

What are the differences between features, advantages and benefits?

Answer 3

Features = a characteristic of a product or service that is consistent whether or not a customer buys it (e.g size, payment terms)

Advantages = a performance characteristic of a service or product that desribes how it can be used or will help the customer. Advantages are what some features provide (e.g provision of a curtosy car as a standard feature)

Benefits = a facourable result for the customer arising from a particular advantage

Question 4

Most benefits can be linked at a high level to what 3 things?

Answer 4

Money can the product save the customer money or fit in their budget?
Time can the product save the customer time? e.g less work and so less stress when an accident occurs.
Ego can the product make the customer feel good?

Question 5

making the link to the individual

The FCA has guidance on how information should be shared with the customer in 3 outcomes, what are they?

Answer 5

2) Products are marketed and sold in a market that is designed to meet the needs of indentified consumer groups and are targeted accordingly.
3) Consumers are given clear information and are kept appropriately informed before, during and after the point of sale
4) Where consumers are given advice, it is suitable and takes their circumstances into account

Question 6

FCA guidelines & making the link to the individual

What are 3 responsbilities of insurers and insurance intermediaries when it comes to providing information to their customers

as set out in ICOBS 6

Answer 6

1) an insurer is respondsible for providing informaton required on mid term changes, an intermediary is responsible for producing price information it agreed with an insurer
2) if there is no intermediary then the insurer is responsible for providing this information
3) an insurer must produce information in good time to allow the intermediary to comply with these rules

For example, ensuring that renewal documents are issued in good time rather than the day before as this would restrict the customer or their intermediary from investigating alternative options

Question 7

FCA guidelines on making the link to an individial

Who must the IPID be drawn up by?

Answer 7

The manufacturer of the policy

Question 8

FCA guidelines on making the link to an individial

How can a firm ensure that customers can make an informed decision?

Answer 8

By ensuring that a customer is given appropriate information about a policy in good time (in a comprehensible form) and can be followed up with policy documents and a statement of fact.

Question 9

FCA guidelines on making the link to an individial

When does the ICOBS appropriate information rule apply to ensuring customers can make an informed decision?

Connects to 3 things

Answer 9

1) at all stages of a contract (pre & post conclusion / mid term changes and renewal)
2) whether a policy is sold alone or in connection with other goods or services
3) to the price of the policy

Question 10

FCA guidelines on making the link to an individial

In what 6 ways may the level of information required vary when ensuring customers have the right information to make an informed decision?

Dependant on:

Answer 10

1) The knowledge, experience and ability of the typical customer of the policy
2) The policy terms (main benefits, exclusions, limits, conditions, duration)
3) The policy’s overall complexity
4) Whether the policy is purchased in connection with other goods
5) Whether the policy is purchased ay a distance
6) Whether the same information has already been provided and if so, when

Question 11

FCA guidelines on making the link to an individial

When firms provide consumers with
* a quote for a travel insurance policy; or
* a statement in respect of a trvael insurance policy included in a packaged bank account

A firm should also supply what at the same time?

Answer 11

• Disclosure whether any medical condition exclusion can be removed from the policy
• If so, how and the terms on it that can be removed

They must also remember to ensure that the policy proposed is consistent with the customers insurance demands and needs

Question 12

FCA guidelines on making the link to an individial

What does the FCA guide to be appropriate information for commercial customers when making a link to them and a product?

I.e what is appropriate information for commercial customers

a firm dealing with a commercial customer:

Answer 12

1) may choose to provide some or all of the appropriate information in an IPID if it is considers to be a comprehensible form to provide the information in
2) should inclide the IPID information (regardless of whether an IPID itself is provided)

Question 13

How is the consumer rights act 2015 relevant when insurers are communicating the features and benefits of a policy to its customers?

Answer 13

Unfair terms and conditions under the unfair contract terms act 1977 the core terms of insurance contracts (such as exclusions) cannot be challanged on the grounds of fairness

Contractual status of some voluntary statements
some volutary statements said or written by a trader to a consumer will be treated as terms of the contract. These statements that are taken into account by the consumer when deciding whether to enter into the contract.

Question 14

The unfair contract acts term 1977 states that the core terms of an insurance contract (such as exclusions) cannot be challanged on the grounds of fairness. (Which mirrors the concumsers rights act 2015).
However, the act also states that a term is not subject to the fairness test provided that it is both what?

Answer 14

• Transparent - in plain, intelligible language
  Prominent - brought to the customers attention in such a way that the average, well informed observant would be aware of them

Question 15

What are the advantages of cross selling & up selling to existing customers?

Answer 15

It is usually easier to do as they already have experience of the organisations products and services.
It is also saves time and costs as the costs of acquiring new customers is far greater than the costing of keeping an existing one

Question 16

What are the differences between cross selling and up selling?

Answer 16

Cross selling = selling a different product or service to an existing client
Up selling = persuading a client to buy more expensive products or more products than intended.

Question 17

Cross selling and up selling

There are rules that apply when an insurance policy is sold in connection with or alongside other goods and services. Outline 2

Clue
Where insurance is the primary product then what
Where insurance is ancillary to another good then what

Answer 17

• Where insurance is the primary product, firms must inform the customer whether it is possible to buy the elements of the package seperatley. Where this is possible, they must also outline a description of the components including costs.
• Where insurance is ancillary to another good or service, the insurance must not be compulsory. The customer must be able to buy the good or service without the insurance. E.g you can buy a car but the insurance doesnt have to be bought at the same dealership.

Question 18

Long term customer management can help build customer loyalty and retention.
What ways can an organisation show their value to improve the relationship?

Answer 18

Consistent delivery in keeping promises or quality staff throughout all departments
Proactive customer relationship management e.g commercial customers would benefit from quartlery meetings to check if there any any changes to the business, claims experience or service level agreements
Claims service this is testing the product that the member purchased and whether it meets expectations or not

Question 19

developing customer loyalty and retention

What 4 factors may influence the delivery of a claims service?

Answer 19

1) The supply chain can involve multiple people (e.g loss adjusters, solicitors) who all influence the quality service that the customer recieves
2) Emotions making a claim is often an emotional or stressful time which can challange customer service
3) Repudiations claims are declined, but they are only made because the customer is under the impression that the loss would be covered so the policy has not met their expectations
4) 3rd party liability claims can be frustrating for a customer who may not understand why a 3rd party is being paid and or the amount involved

Question 20

developing customer loyalty and retention

There are multiple factors that influence the delivery of a claims service, therefore it is necessary for an organisation to make sure that what?

2

Answer 20

• Effective systems are in place to ensure a seamless process, even when there are several suppliers involved
• Staff have the right skills and knowledge to be able to engage with the customers