In the UK, the FSA administers the rules governing the insurance industry.
In the United Kingdom, or UK, the Financial Services Authority, or FSA, is responsible for regulating all businesses involved in providing financial services. The FSA also regulates financial industry sectors, such as the insurance industry. The FSA is responsible for administering rules designed to protect the public, and other businesses, from unfair practices and fraud. It is also responsible for creating a framework of rules for the financial industry that are designed to combat financial crime, such as money laundering. FSA rules are contained in the FSA handbook.
Clear Communication
Rule 2,2.2 of the FSA rules governing the insurance industry states that any insurance firm communicating with a customer, including a potential customer or an existing policy holder, the communication must be fair, easily understood and not misleading. For example, it would be misleading to advertise the potential benefits of "with profits" policy, which invests a portion of each premium, with the intention of providing a lump sum payment when the policy matures, in such a way as to make a potential customer feel that a certain level of investment performance could be reasonably expected. If an insurance firm discovers an existing promotion is in any way not fair, clear or is misleading, the firm must state it does not agree with the content of the promotion and must communicate this to anyone who may be relying on the information to make a financial decision, as soon as possible.
Distance Marketing
Distance marketing is the process of soliciting business by communicating directly with a potential customer, where the communication reaches the potential customer at a place other than the office, or branch of the company making the communication. Distance marketing includes direct telephone marketing, and section 3.1 of the FSA handbook contains rules governing distance marketing communication. According to section 3.1.6, whenever a representative of an insurance firm contacts a potential customer via telephone, the representative must identify the firm represented and must state the purpose of the call at the beginning of the call. All contractual details must be communicated to the customer, and these must be made available in writing, before the customer signs any binding contract.
Eligibility to Claim Benefits
An insurance firm must ensure a customer does not purchase a policy that the customer cannot claim benefits on. For example, if a medical policy specifically states that pre-existing medical conditions are not included, and a customer specifically wants a policy that does cover a pre-existing condition that the customer has suffered in the past, the insurance company must not sell the customer a policy that does not cover the pre-existing condition. If a policy satisfies some, but not all, of a customer's requirements, rule 5.1 states that the firm is allowed to sell the policy to the customer, provided that the firm has informed the customer of all the facts relating to coverage provided by the policy, allowing the customer to decide whether or not to buy the policy.
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