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.