What insurance firms should tell you when you buy

BUYERS OF insurance should be offered more protection under new rules on the selling of general insurance from Jan 14 next year.

Under the Financial Services Authority’s rules, anyone selling or advising on insurance from that date must be FSA-registered and must inform the customer of this. Buyers of insurance must also be automatically given a clear statement of why a policy they are being sold is suitable for their needs.

“There must also be a statement of price, making it clear how much it is costing and separating out any fees or administrative charges the seller is receiving as a result of the deal,” says Rachel Kelsall, general insurance compliance manager with the NFU Mutual.

Other new rules mean that:

Renewals notices for private individuals should be received 21 days before the renewal date, giving policyholders time to consider alternatives. Business insurance customers must be sent renewals “in good time”, but some insurers, including the Mutual, are choosing to give business policyholders a 21-day renewal notice period, too.

Sellers are also obliged to inform the customer how the insurance has been found – whether the seller is tied to one firm, just a few firms, or whether the whole market has been searched for the cover.

A policy summary should also be provided which picks out the main benefits and restrictions of the cover in clear and fair terms.

Claims should be acknowledged within five days.

Once a claim has been established and agreed, it should be paid within five days.

All of these should be voluntarily provided to the customer; he or she should not have to ask for them.

The new rules include consultants who advise on insurance, many of whom have chosen to register already, and retail outlets which sell insurance alongside their products, such as motor traders, machinery dealers and land agents.