IF3.4 renewals and cancellation Flashcards
Why may insurers want renewals?
- It expensive to get new customers
- statistical info about the client base will be more accurate
Does the insurer have to invite renewal?
No
What does ICOBS say about renewal?
The insurer must give customers appropriate information and time to decide about renewal
FCAs rules for transparency at renewal to avoid old customers paying more than new customers
- disclose last years premium
- encourage customers to check their cover and shop around
- identify customers who has stayed with an insurer for a long time and encourage them to shop around
Rules for if the insurer cancels
- 7 days written notice delivered to insureds last known address
- proportionate return of the premium
Consumers rights to cancel according to ICOBS
14-day period from the date of inception or renewal to cancel their policy (cooling off period), premium will be refunded.
Insured cancelling mid term
a short-period premium may be charged - gives a less than proportionate refund.
Consumer Rights Act 2015 on mid term cancellations
While the insurer may charge fees as part of cancellation, these cannot be disproportionately high.
What happens to add-ons if an insurance policy is cancelled?
According to the consumer rights acts 2015, if the primary policy is cancelled then the add-ons are also cancelled (by the insurer)
If an insurer has provided consideration under a policy (aka paid out a claim) then…
no refund may be given if the insured cancels
What did the FCA and the competition markets authority find
insurers increased the price of insurance every year at renewal.
Consumer Insurance (disclosure and Representations) Act 2012
insurer is required to take better care ensuring that consumers are aware about updating information on material circumstances
