ICP 19 Conduct of Business

The supervisor requires that insurers and intermediaries, in their conduct of insurance business, treat customers fairly, both before a contract is entered into and through to the point at which all obligations under a contract have been satisfied.


Fair treatment of customers


19.1

The supervisor requires insurers and intermediaries to act with due skill, care and diligence when dealing with customers. 


19.2

The supervisor requires insurers and intermediaries to establish and implement policies and processes on the fair treatment of customers, as an integral part of their business culture. 


19.3

The supervisor requires insurers and intermediaries to avoid or properly manage any potential conflicts of interest.  


19.4

The supervisor requires insurers and intermediaries to have arrangements in place in dealing with each other to ensure the fair treatment of customers.


Product development and pre-contractual stage


19.5

The supervisor requires insurers to take into account the interests of different types of consumers when developing and distributing insurance products. 


19.6

The supervisor requires insurers and intermediaries to promote products and services in a manner that is clear, fair and not misleading. 

 


19.7

The supervisor requires insurers and intermediaries to provide timely, clear and adequate pre-contractual and contractual information to customers. 

 


19.8

Where customers receive advice before concluding an insurance contract the supervisor requires that the advice provided by insurers and intermediaries takes into account the customer’s disclosed circumstances.

19.8.1    

Advice goes beyond the provision of product information and relates specifically to the provision of a personalised recommendation on a product in relation to the disclosed needs of the customer.  

19.8.2    

The insurer or the intermediary should make it clear to the customer whether advice is provided or not. 

19.8.3    
Insurers and intermediaries should seek the information from their customers that is appropriate for assessing their insurance demands and needs, before giving advice. This information may differ depending on the type of product and may, for example, include information on the customer’s: 
  • financial knowledge and experience;
  • needs, priorities and circumstances;
  • ability to afford the product; and
  • risk profile.

19.8.4    

The supervisor may wish to specify particular types of policies or customers for which advice is not required to be given. Typically, this may include simple to understand products, products sold to customer groups that have expert knowledge of the type of product or, where relevant, mandated coverage for which there are no options. Even if no advice is given the supervisor may require the insurer or intermediary to take into account the nature of the product and the customer’s disclosed circumstances and demands and needs. 

19.8.5    

In cases where advice would normally be expected, such as complex or investment-related products, and the customer chooses not to receive advice, it is advisable that the insurer or intermediary retains an acknowledgment by the customer to this effect.  

19.8.6    

The basis on which a recommendation is made should be explained and documented, particularly in the case of complex products and products with an investment element. All advice should be communicated in a clear and accurate manner, comprehensible to the customer. Where advice is provided, this should be communicated to the customer in written format, on paper or in a durable and accessible medium, and a record kept in a “client file”.  

19.8.7    

The insurer or intermediary should retain sufficient documentation to demonstrate that the advice provided was appropriate, taking into account the customer’s disclosed circumstances. 

19.8.8    

In addition, insurers and intermediaries should review the “client files” of those under their responsibility to exercise control after the fact on the quality of the advice given, take any necessary remedial measures with respect to the delivery of advice and, if applicable, be in a position to examine fairly any complaints submitted to it. 

19.8.9    
There should be a responsibility on the insurer and the intermediary to promote quality advice. In order to ensure the delivery of quality advice, the insurer and intermediary should, in particular, establish continuous training programmes that allow the persons giving advice to: 
  • keep abreast of market trends, economic conditions, innovations and modifications made to the products and services;
  • maintain an appropriate level of knowledge about their industry segment, including the characteristics and risks of the products and services;
  • know the applicable legal and regulatory requirements;
  • know the requirements for the communication of information regarding the products and services and for appropriate disclosure of any situation liable to compromise the impartiality of the advice given or limit such advice; and
  • be familiar with the documentation regarding the products and services and answer reasonably foreseeable questions.
This could include insurers providing training to their sales staff and to intermediaries in respect of specific products. 


Policy servicing


19.9
The supervisor requires insurers to: 
  • service policies appropriately through to the point at which all obligations under the policy have been satisfied;
  • disclose to the policyholder information on any contractual changes during the life of the contract; and
  • disclose to the policyholder further relevant information depending on the type of insurance product.


19.10

The supervisor requires insurers to handle claims in a timely, fair and transparent manner. 

 


19.11

The supervisor requires insurers and intermediaries to handle complaints in a timely and fair manner.  

 


19.12

The supervisor requires insurers and intermediaries to have policies and processes for the protection and use of information on customers.   


Information supporting fair treatment


19.13

The supervisor publicly discloses information that supports the fair treatment of customers.