Industry regulator the FMA has issued New Zealand insurers a set of guidelines it expects them to follow as a result of the ongoing financial impact on consumers due to Covid-19 Alert Level 3.
Among the recommendations are that insurers should not use the pandemic as a customer acquisition tool and that sufficient training should be offered to advisers on any new Covid-19 policy terms or changes.
“Our expectation is that insurers remain cognisant of the challenges faced by New Zealanders, continue to offer support and flexibility to assist policyholders, and do what is possible to maintain or reduce costs for consumers at this time,” writes the FMA’s Clare Bolingford, Director of Banking and Insurance.
The organisation has been actively engaging with insurers over recent weeks and, writes Bolingford, has seen examples of proactive behaviour it is encouraging others to follow.
These include:
- Insurers using additional print and digital media to publicise relief offers encouraging customers to make contact if they are in financial hardship
- An insurer using call centre capacity to make contact with elderly customers checking on their welfare and directing them to support agencies
- Resilience and vulnerability training for distributers so they can better support customers
- Reductions or refunds of premiums where lower than planned claims ratios exist
- Additional support to existing claimants
The FMA has also asked insurers to address the changing circumstances of all customers and maintain proactive and regular communications with them.
It is keen to see that all offers of customer relief, such as cover suspension or payment holidays, are clearly explained to distributers and customers.
Customers should be treated fairly where changes are made to existing products…
Bolingford writes: “Our expectation is that all relief offers and [their] potential implications for customers (such as inability to claim during the suspension) are clearly articulated.”
The FMA also expects insurers to clearly communicate any Covid-19 policy exclusions that may impact cover and use of policies.
“Customers should be treated fairly where changes are made to existing products,” writes Bolingford. “Coverage should also be clearly explained to customers who are due to renew their policies, such as ‘special notices’ highlighting where changes have occurred.”
She also suggests insurers put in place processes to ensure claims are processed efficiently, while taking into account Covid-19 restrictions.
These processes can include new and on-ongoing claims and their ability to meet requirements for medical approvals, and the requirements for assessors to validate replacement costs, police or witness attestations.
Other expectations of insurance companies include:
- Customer complaints processes that are fit-for-purpose and any complaints are managed genuinely, promptly, fairly and consistently
- Have processes in place to underwrite and bind new insurance policies, where possible, without overt reliance or dependence on external parties
- Where premium increases [above CPI] are being planned or enacted, clients receive additional advanced warning and are provided additional options for those facing affordability issues
- Provide sufficient training for advisers on new Covid-19 policy terms or changes to underwriting and claims processes so they can support customers
- Ensure that you and your distributers maintain acceptable advertising standards during Covid-19. As an example, not using Covid-19 as a customer acquisition tool
Bolingford says: “Along with the other members of the Council of Financial Regulators we will continue to actively monitor the insurance sector, in particular how companies are responding to customer needs at this time.”
In Australia, ASIC issued similar guidelines to insurers there.