Chapter 4: Renewals and Cancellation Flashcards
Why is a renewal date important?
It allows reconsideration of the insurance by both the insured and the insurer
Why are insurer keen to encourage renewals?
If a client base remains stable, statistical information remains accurate, and renewal is cheaper than writing new business
Define ‘renewal notice’
A notice sent to the insured before renewal is due
Define ‘auto-renewal’
Automatically renewing policies where customers have a direct debit arrangement in place
What does ICOBS rule 6.1.5 R say?
A firm must ensure a customer is gievn appropriate info about a policy in good time, so they can make an informed decision about the proposed arrangements
What are the FCA’s rules for transparency of renewals for persoanl insurances?
Firms must disclose last year’s premium on renewal, must encouareg customers to shop around, and give customers who have renewed with them 4 times in a row a separate message encouraging them to shop around.
WHat becomes the insured’s duty at renewal?
The duty of disclosure, and detail any changes in the risk
Define ‘cancellation’
Outlines how an insurance policy can be cancelled by the insurer
How expansive is the insurer’s ability to cancel insurance these days?
Relatively limited under the Consumer Insurance (D and R) Act 2012 and the Insurance ACt 2015
What cancellation rights do consumers of general insurance have?
Can cancel up to 14 days from inception of the policy
What is a short period premium?
A premium where a less than proportionate refund is given to the insured, due to the upfront costs of writing a policy having cost the common pool more than the average
When is an insurer likely to cancel a policy?
If they see material information was not presented by the policyholder, the survey finds the risk is poor, or the recommendations suggsted by the survey are not implemented in time
What is the minimum number of days an insurer can give notice of cancellation?
7 days
Who has the duty to send the messages about renewal to consumers?
Insurers AND intermediaries
