(Estimated reading time: 3 minutes, 16 seconds)
Knowledge really is power!
In October 2018 the Insurance Distribution Directive (IDD) came into force and introduced a number of new obligations that firms involved in the designing and the selling of insurance products need to meet. We take a look at two key elements of these requirements and how these can be met.
We all strive to do the very best for our customers, but when it comes to regulations and compliance, it is essential to know what is expected of us, how to deliver this and how to demonstrate we are completing this in a compliant manner. This includes
- To know the customer’s needs and that they have the most suited products.
- To know the customer understands their cover, their rights and how to pursue these.
- To know you are compliant and can demonstrate it.
The aim of the new legislation was to increase consumer protection when buying insurance and to promote competition between insurance distributors for the benefit of consumers.
The main areas covered by the regulation included:
- Customer demands and needs.
- Conduct of business including acting in customers’ best interest.
- Training and competence for employees selling insurance.
- Conflicts of interest disclosure.
- Pre-contract disclosures.
- Remuneration disclosure.
- Product oversight and governance.
- Complaints handling.
The directive requires the insurance distributors to act honestly, fairly and professionally in accordance with the best interests of the customer. There is also a greater scrutiny on firms to demonstrate they do not make any arrangements influenced more by remuneration, over a product that would better meet the customer’s needs.
How do we fully understand the customer’s needs and requirements? How do we ensure the products we provide meet these needs and do we demonstrate the customers needs continue to be met?
There are various processes that we can adopt to attempt to achieve this which include:
The Customer’ Needs
- Review the sales process to make sure you identify a client’s demands and needs early on.
- Review your sales scripts to make sure staff obtain enough customer information.
- Include questions to determine what the customer likes about existing suppliers and what they look for in companies they want to work with.
- Dig deeper than price to understand other decision factors, such as quality, service levels and reputation.
- Future proof questions by asking about current requirements and potential future needs in the year ahead and beyond.
- Once completed ensure only those products that are consistent with the demands and needs are offered.
The Product/Provider
- Make sure that you have carried out a thorough analysis of possible insurers and the products available.
- Document products with enhanced covers and assistance services, so that recommendations can be mapped to client’s needs.
- Weight providers not only on cover, but on customer service, reputation, financial standing.
- Periodically review your insurance partners.
- Regular staff training on your range of insurers products available.
- Carry out random checks and scoring to ensure clients have best product for their needs!
If we prioritise understanding the customer’s needs at the outset and throughout their partnership with us, it enables us to source and provide the best products for them. Include challenging our providers where necessary to evolve their cover and service to the changing needs of our customer or switching to providers more suited to our customers needs.
This with frequent review of our insurance providers and their products, and documenting how we map our customers needs to the cover provided, will not only ensure we are doing the very best for the customer, but will provide an excellent audit trail for any compliance visit.
* Temple Legal Protection suggest that firms take their own advice on the Insurance Distribution Directive and this article is not intended as formal compliance advice in place of this.
To find out how Temple Legal Protection’s legal expenses insurance products can help you to retain and gain more customers as well as extend or compliment your range of service offerings please call me on 01483 514429 or email sean.fayle@temple-legal.co.uk.
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Sean Fayle
Senior Underwriting Manager
01483 514429
Sean Fayle
Sean started his insurance career in 1994 and has been specifically involved in Legal Expenses since 1997. Over a long career specialising in legal expenses, he has worked as an underwriter, sales executive and relationship manager.
His experience of underwriting a variety of commercial and personal, stand alone and schemes accounts means that our customers have the benefit of his broad knowledge.
As a relationship manager, Sean has a strong focus on customer service and a desire to get the best outcomes for our clients and works closely with our business partners to achieve this.
Sean’s extensive knowledge of the legal expenses market helps to support Temple Legal Protection as a market leader for BTE & ATE insurance.
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