How do FCA changes affect add-on renewals?

Following our recent video on “Unbreakable bundles” https://youtu.be/eS_7SLf8lWU on the 14th of March; we have already received a number of queries from brokers concerning the renewal of add-on insurance. We hope the information below will be helpful to anyone involved in renewals at the moment.

Q & As about renewing add-on insurances

 

See Annex B PS15/22  http://www.fca.org.uk/static/fca/documents/policy-statements/policy-statement-15-22-general-insurance-add-ons.pdf

The Insured made a conscious decision the previous year to opt-in for an add-on, what happens now?

Where the add-on was originally purchased on or before 31 March 2016, and renewal is invited on substantially the same terms, the broker can automatically assume that the insured wishes to renew the add- on provided that they take reasonable steps to inform the customer that the renewal of the product is optional and that the customer can decide not to renew the product.
The customer must also be told of the effect of any non-renewal.
(The onus is on the customer to inform the broker if they don’t wish to renew)

   
The Insured had additional covers alongside his Home buildings insurance policy that had been provided on an opt-out basis previously. While not exercising his right to opt-out he had not made an active decision to buy the cover in the past, what do I need to do?

Where a customer has not previously made an informed decision to select the add-on, the broker must obtain the insured's informed consent to renew cover.
The customer must also be told of the effect of any non-renewal. (The onus is on the broker to obtain active consent from the insured to renew).
 

The Insured had it as a mandatory cover but may want to have it taken out of the policy, how does this work?

Where covers are "bundled" or built-into a wrapper of products and there is no optionality – i.e. the customer buys and pays for the whole bundle or nothing at all, the rules about obtaining consent for each component within a bundle do not apply.

FCA study into the sale of add-ons video

Discover our latest brand new tutorial video which covers the FCA's investigation into the sale of add-on products in the general insurance market and the resulting action that has been taken :

Emergencies closer to home

Since 2008, ARAG Home Emergency claims handling has been delegated by ARAG to Cunningham Lindsey, the UK’s leading loss adjuster and outsourced services provider. Until very recently, claims were handled between their Glasgow and Cardiff centres, with the choice of venue largely being dictated by when the claim was reported, with Cardiff dealing with out-of-hours as well as a few specialist schemes, and the rest being dealt with out of Glasgow. From 1 February however, all ARAG operations are handled under one roof in the Welsh capital, with bolstered customer relations resources and far more room for growth. Being geographically close to Bristol, it allows us the opportunity to retain an even closer liaison with our Home Emergency team and it also simplifies the audit process, which facilitates continual improvements in service delivery to our 500,000+ customer base.

The impressive purpose-designed 24/7 operations centre is resilient to disaster. It features totally independent fibre-optic communications systems that enter the building at different locations. This means that even if one of the cables was damaged, the other would continue to enable telephone traffic. There is a back-up generator as well as an uninterrupted power supply for IT and telephony equipment. In the case of such an emergency, calls can be re-routed between Cardiff and Glasgow. The availability of these backup systems as well as multi-skilled staff that are ready to cope with surges in demand, ensure continuity at the facility.

Transferring the in-house operational team from Glasgow to Cardiff has already improved the flow of information. Additionally, Cunningham Lindsey has appointed a Customer Services Manager who is dedicated solely to working on any areas of dissatisfaction brought to our attention; we have very quickly started to see the benefits of such.

Hiscox selects ARAG following home emergency review

Specialist global insurer Hiscox has selected leading legal expenses and assistance provider ARAG to supply home emergency cover to  its direct home insurance customers. 

The decision follows a market review conducted by Hiscox and will result in ARAG delivering a bespoke product to its mid-net worth policyholders. 

“Clearly, we had to offer something pretty special for Hiscox.” comments ARAG Head of Sales, Andy Talbot. “The cover is much wider than a normal home emergency policy, with fewer exclusions and all supported by an outstanding level of claims service. I’m obviously delighted to extend the relationship that we have started to build with such an iconic insurance brand” 

Phil Thorn, Head of Direct Home Insurance at Hiscox adds “We have been working with ARAG for two years on our high net worth business during which they have demonstrated the flexibility and innovation that we need to deliver the best possible product to our customers, as well as the very high levels of service that Hiscox policyholders rightly expect.

- Ends -

Notes to Editors 

ARAG plc is part of the global ARAG Group, the largest family-owned enterprise in the German insurance industry. Founded in 1935, on the principle that every citizen should be able to assert their legal rights, ARAG now employs 3,700 people around the world and generates premium income in excess of €1.65 billion.  
Operating in the UK since 2006, ARAG plc provides a comprehensive suite of ‘before-the-event’ and ‘after-the-event’ legal insurance products and assistance solutions to protect both businesses and individuals. For further information, visit www.arag.co.uk 
Hiscox, the international specialist insurer, is headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). There are three main underwriting divisions in the Group - Hiscox London Market, Hiscox Re and Hiscox Retail (which includes Hiscox UK and Europe, Hiscox Guernsey, Hiscox USA and subsidiary brand, DirectAsia).  
Hiscox underwrites internationally traded, bigger ticket business and reinsurance through Hiscox Re and Hiscox London Market. Through its retail businesses in the UK, Europe and the US Hiscox offers a range of specialist insurance for professionals and business customers, as well as homeowners. For further information, visit www.hiscoxgroup.com 

Contacts 
Rachael Wornes, Marketing Manager, ARAG UK, 0117 917 1578, pressoffice@arag.co.uk 
Paul Jacobs, Director, Consultable, 079 0982 1731, paul@consultable.co.uk

Why professional practitioners need legal expenses insurance

The following claim illustrates the value of legal expenses protection for professional practitioners who are vulnerable to patients or customers making accusations against them. In these cases individuals are unable to recover legal costs and experts' fees from the person making the complaint or from their professional body. Even if practitioners feel confident to represent themselves in person at a conduct or disciplinary hearing they could be exposed to significant costs needed to obtain an expert's opinion.  

Background of claim

Our insured, who practiced as a chiropractor, was notified by his profession's regulatory body that it had received a complaint from one of his patients. The patient alleged that our insured's practice had published misleading or inaccurate statements on its website which gave the impression that our insured was a registered medical practitioner (when he is not); notes of the consultation were inaccurate; there had been a failure to record diagnosis and plan of care.  Our insured was required to attend a Professional Conduct Hearing. 

Establishing an insurance claim

We took advice and were satisfied that allegations of providing misleading or inaccurate information did not amount to acts of dishonesty and were not therefore caught by the "dishonesty" exclusion applicable under his policy.   We appointed a lawyer to determine whether there were reasonable prospects of successfully defending the insured. The lawyer required a Chiropractic expert report to advise on the facts of the case in order to determine prospects of success.  As the expert's report confirmed that none of the matters complained of were sufficient to constitute unacceptable professional conduct he was able to confirm that there were prospects of successfully resisting the allegations.

Further allegations

Prior to the hearing our insured's professional body served a further witness statement and two additional expert reports in which their expert opened up a new issue, which, simply put, brought to light the possibility that our Insured had technically gone beyond the neck and thoracic area when treating the patient’s neck symptoms.  Our insured's lawyer obtained advice from a barrister and our expert’s views on this and engaged in further reading, which confirmed prospects of success continued in favour of our insured.  

The outcome

The case took five days to conclude and was successful in that our insured was exonerated of unprofessional conduct.

What the policy pays

We are currently awaiting receipt of the solicitor's invoice for costs and disbursements, however we expect to pay around £38,000 which includes fees for expert's reports (£11, 700), barrister's fees(10,800)  and our insured's solicitor's fees and costs (£15,500).