FCA’s new rules about Renewals effective 1st April 2017
From the 1st April 2017, the FCA rules about Renewals are changing.
The new rules apply to:
- Renewal invitations sent by brokers from that date onwards (not for risks renewable on that date).
- Insurers and intermediaries selling retail insurance products.
- Existing consumers directly being offered renewal (not part of a group policy).
The New Rules
The new rules stipulate that FCA regulated firms must provide the following when offering renewal of a policy:
- Inform the customer of last year’s premium.
- Provide wording encouraging the customer to check their insurance cover meets their needs, and asking whether they’ve considered shopping around to find the best deal for the cover they want.
- Renewals invited for the 4th time (and each renewal from then on) must provide the below mandated wording to the customer: “You have been with us for a number of years. You may be able to get insurance cover you want at a better price”.
Disclosure of Last Year’s Premium
Firms should disclose the previous year’s premium on the renewal notices sent to clients. Where a customer’s circumstances have changed during the course of the policy year, for example a mid-term adjustment, the disclosure must show the customer an annualised premium reflecting any changes. The previous year’s premium can then be compared with the quoted renewal premium.
Unlike most General Insurance products, Travel Insurance is always changing, whether this is due to changes in health or travel patterns.
We have been reviewing the new Renewal Rules and, following discussions within the industry and our underwriters, have altered our renewal process and will be offering a new quotation and policy to our customers.
For our brokers; our B2B system is being updated so that from 1st April 2017 you will receive the information as you have done previously. A new quote record will appear in your renewal list 30 days before the renewal date. You can use this information to send your client a renewal letter conforming with the new rules as shown above.
If your client has previously gone through a medical screening you will need to re-screen their condition(s) to ensure the policy is still suitable, as medical declarations do not carry over from year to year. Once you have discussed your clients’ requirements for the coming year with them, you can amend any details, if necessary, or accept cover.
To ensure continuous cover, please ensure this is done before or on the renewal date. The renewal quotation is valid for 30 days from the date it is issued and is based on the information previously entered. Should any information change, such as the client’s health, policy start date or any new information that will result in a change to the original, a new quotation will need to be given to replace the original. This could result in a change of terms and/or an increased premium.
Should you require any more specific information regarding these requirements, please visit the FCA website: https://www.fca.org.uk/firms/transparency-insurance-renewals
We are here to help
Thank you for your continued support.
Broker Development Manager
P J Hayman & Co Ltd