Better consumer information on the way

Whatever the final outcome of the Insurance Distribution Directive (IDD), end-users will be better informed on the insurance products they are buying.

Consultation may yet modify the FCA’s suggestions but the broad concepts will remain and apply from pre-purchase to after the end of the contract:

• know your customer
• know your target market
• facilitate product comparisons and avoid competitive distortions
• provide Insurance Product Information Document (IPID)
• protect customer’s money
• no conflicts of interest

Achieving all these objectives requires a holistic approach within the organisation and then again when the product is retailed, bundled or distributed. Point of sale is of course the most crucial aspect but IDD will impact on product design, sales, HR, data security and many other areas.

The consumer must first be presented with a clear choice that meets their needs and, second, be provided with something that lives up to their expectations.

The new IPID must be in a durable medium, such as on paper, and contain objective details of the product and exclusions. It must be available for renewals and bundled packages where more than one IPID may be needed. Though brief in content, it must give sufficient helpful information to inform the customer’s choice prior to them concluding the contract. It will be up to the retailer to decide the point at which the information is most appropriate to aid that choice. 

Get it wrong and it will of course count against you in ombudsman decisions.

Sometimes doing the “right” thing leads to unforeseen consequences

A couple of “issues” have passed my desk recently which leave me with a smarting sense of injustice.

Take Insurance Product Information Documents (IPID)…

My own opinion is that IPIDs are inferior to Key Facts documents in the UK because consumers will receive less information about their insurance product than they previously would have been given.

For example, where products are created by a managing general agent, there is no requirement to show the insurer. More generally, IPIDs do not include information about making a complaint and do not allow exclusions that apply to a particular insured event to be lined up against the description of that insured event. Additionally, there is no space to highlight extra services which complement “what is insured” – such as telephone helplines and in-line legal documents which significantly enhance the value of products for consumers.

We have taken a very flexible approach to product development and have delighted in designing unique features that respond to the needs of specific target customers and give niche cover. As a consequence of our willingness to go the extra mile, ARAG IPIDs will need to reflect the many modifications that we have made. Our innovation has been wide-spread and we have hundreds of “non-standard” wordings to consider. Had we adopted a more intransigent approach and not deviated from our standard product specifications, delivering to the exceptionally tight deadline would have been very much easier.

We also have many “embedded” policies where we have integrated ARAG products into primary insurance products. The “primary insurer” is deemed to be the product manufacturer under these circumstances. We will liaise on an individual basis to supply content for their IPID in relation to the ARAG cover that has been embedded.

We continue to hope that the FCA will agree to a transitional introductory period which will allow us to fully review all of our offerings and create suitable IPIDs for all of those special profile customers. In the meantime, we will be contacting our agents to supply suitable IPIDs very soon.

And what about employment tribunal fee refunds?

While the abolition of unfair employment tribunal fees is a splendidly good thing, it was very disappointing to read that where settlements have been reached between the parties in dispute -with fees being included within the settlement figure, the employer will be unable to apply for a rebate. The employee, who would have paid the fee the first place (but recovered it as part of their settlement), can apply for the refund and will stand to benefit from a “windfall”.  It seems that employers who have “done the right thing” by settling the dispute are being penalised, while those who may have proceeded to tribunal, lost and received an order to pay will be able to obtain a refund.

This seems very unfair as escalating disputes to tribunal is surely a last resort. It is in the best interests of parties to arrive at an amicable settlement.

So, doing the “right” thing sometimes causes detriment however, we will always put our customers first. We remain committed to building products that work well and to raising customer awareness of the benefits they can access when they buy legal expenses cover.