Chapter 4 Flashcards
What is a renewal date?
Most policies are issued on a 12 month basis. At the end of the 12th months/the anniversary date when the renewal is due is said to be the renewal date.
Are all policies on a 12-month basis?
No there are short-term policies for things like contract-works and long-term policies for things like run-off cover.
Give 2 reasons insurers prefer to retain renewals.
- Statistics: it is good for the client base to remain stable
-Cost: it is cheaper to renew than get new business e.g., due to marketing costs
What is a renewal notice?
An often automated process which lets the insured know their renewal is coming up.
Are insurers allowed to auto-renew contracts?
Yes but they must make the insured aware. This is good for compulsory insurances and insureds who forget to renew.
What is the ICOBS rule 6.1.5R
A firm must take reasonable steps to ensure a customer is given appropriate information about a policy in good time so they can make an informed decision.
Why were the FCA concerned about auto-renewing policies?
That is could be unfair for the pricing of renewing customer - as often existing customers will pay more than if they’d arranged a new policy.
In April 2017, what 3 things did the FCA introduce for renewals for consumers regarding transparency?
- Insurers have to disclose last years premium on renewal notices
- They have to included text to check cover
- If a consumer has renewed for 4 consecutive years, there must be additional text encouraging them to shop around
Do insurers have to remind insured’s about their proposal forms at renewal?
Yes, to ensure they are still accurate. This can be in the form of a statement of fact.
What is positive customer outcomes?
We need to consider ethical behaviours and customers need to be confident they are dealing with people who put their interests first.
Should you discriminate based on age at renewal?
No!
In 2023, a new consumer duty came in force. What does it ask for good outcomes in relation to? (4 things)
- Products and services
- Price and value
- Consumer understanding
- Customer support
Do insurers have to let the insured know if they are cancelling? And what time period do they typically give.
Yes - typically this is 7 days written notice to the insureds last known address but this can also be up to 30 days.
Will an insured get money back if they cancel the insurance mid-term?
Yes, typically this is a pro-rata amount unless there have been any claims during the policy period.
What is a cooling off period for insureds?
A 14 day period which allows consumers to change their mind and cancel the policy after inception.
