YOUR COMPLIANCE MATTERS:         General Insurance Pricing Practices (GIPP) (8)

YOUR COMPLIANCE MATTERS:         General Insurance Pricing Practices (GIPP) (8)

Relevance:                 All firms.

Action required:       Reminder to update your Consumer communications to comply with the revised rules from 01 January 2022.

Having provided a number of Newsletters, on GIPP, we thought we should provide a quick reminder to ensure that your Consumer communications will be compliant with Rule changes coming into force on 01.01.22. The following Rules apply only to Consumer customers – they do not apply to Commercial customers:

1. Auto Renewal – right to opt out
2. Premium Finance – additional information and active choice by the Consumer.

Auto Renewal

The Rules do not apply to Private Health, Medical Insurance or Pet Insurance, or to policies of less than 10 months duration (therefore monthly renewable policies are not captured by the revised rules).

For all other Consumer policies, in good time before the conclusion of the contract, the firm must:

• Inform the Consumer whether the policy is set to auto renew;
• Provide the Consumer with an explanation of the impact of the automatic renewal for them; and
• Provide the Consumer with confirmation that they have a right to cancel the auto renewal process at any time.

The Consumer needs to be made aware of:

• The existence of the right to cancel auto renewal;
• The conditions for exercising it;
• The consequences of exercising it; and
• Practical instructions for doing so.

As always, this must be confirmed writing to the Consumer (Email is acceptable).

Renewals

When renewal is invited, the Consumer needs to be made aware of whether the policy will automatically renew, if they take no action, or whether they need to do something to accept the renewal offer.

Cancellation Methods for Auto Renewal

The firm is obliged to provide easy and accessible methods for cancelling automatic renewal. The methods of communicating a choice to opt out must, as a minimum, include the methods by which the customer was able to take out the policy (whether by telephone, online, etc.).

The customer has the right to opt out of auto renewal at any time, whether this be during the purchase process, during the policy period or prior to renewal. and you cannot charge customers a mid-term adjustment fee for changing between automatic renewal and the opt out choice.

Consumer Premium Finance

If you offer premium finance to Consumers, you need to confirm, in good time, before inception or renewal:

• The total cost of the policy if the premium were paid in full.
• The total cost of the policy if premium financed is used.
• The difference between the two figures.
• Confirmation that utilising premium finance will be more expensive than paying for the premium up front.
• Details of any differences between the duration of the policy and that of the premium finance arrangement (if there are any).

Information needs to be presented in an accessible manner which makes it clear that this is key information.

It is also a requirement that the customer makes an active choice between paying in full and paying using premium finance. You will therefore need to seek the customer’s confirmation, having provided them with the annual costs and the difference between them, whether the customer wishes to use premium finance or pay the premium in full.

Actions Required

Firms will need to review their scripts, standard new business confirmation letters, renewal invitation letters etc. in order to comply with the new requirements and ensure that staff are aware of the changes.

As always, if you need any help with implementing the revised Rules, please get in touch.