TIME TO SHOP AROUND MORE LIKE
Brokers will soon have to urge their clients to ‘shop around’ – in our opinion they should be doing this already for you – if you haven’t had a review in over 2 years – chances are you could be missing out on a much better deal.
Brokers and their clients could lose out because of new “game-changing” regulation around the renewal process, it has been claimed.
Proposals published this month by the Financial Conduct Authority (FCA) mean brokers will soon have to disclose last year’s premium at each renewal – but they will also make it mandatory for insurers and intermediaries to encourage clients to shop around to find a better deal than the one being recommended to them.
The proposals, which apply to individual clients and not groups, suggest that intermediaries and insurers will need to include in their documentation a prescribed statement encouraging clients to shop around after the customer has renewed four consecutive times through the same channel.
“Most brokers will disclose the previous year’s premium as a matter of course so this is a non-issue. However, the requirement to encourage your client to ask someone else to mark your homework will surely seem bizarre to the client and is apt to cause confusion.
“An intermediary’s renewal letter may state in one paragraph that they recommend renewal to secure ongoing cover for pre-existing conditions, and then encourage the client to shop around in the next. Absurdly, the regulator is asking us to undermine our own advice.”
The new rules come into effect from 1 April 2017.
The FCA paper is available here.