Intermediaries must engage with Consumer Duty process… Leave a comment

In a session dedicated to putting Consumer Duty into practice as part of the COVER Health Insurance Uncovered broadcast, Bjelobaba said that intermediaries need to engage with the processes and guidelines in some way and “can’t bury their heads in the sand,” as they risk leaving learning about the changes too late.

He explained that the final rulings on the Consumer Duty are due at the end of next month, with firms given nine months to implement any required changes, yet Bjelobaba also said this period is necessary as many firms will often engage with it “at the last minute.”

The biggest challenge insurers currently face, he stated, is making sure they have undertaken the value assessment in time for its deadline on 30 September.

“Don’t leave this to the last minute – you have plenty of time to understand what it means. A lot of the emphasis is on the insurer in terms of the product design, the quality, the information, but the intermediary also has a huge role to play in terms of understanding what the customer really does want, what works for them and exploring that with them,” he said.

While it is important for intermediaries and insurers to engage with the FCA Consumer Duty, Bjelobaba acknowledged that understanding the changes and documents “can be a challenge”.

He said that due to some of these documents being “very dry” and often running to 200 or 300 pages, some people might not want to “burden themselves with too much information.”

However, he stated that through mediums such as industry bodies like the Association of Medical Insurers and Intermediaries (AMII), the necessary information can be accessed and digested in a much easier way: “However you get the information, you need to get the information,” he said.

Using an analogy, Bjelobaba explained that Consumer Duty is like an icing on a cake: “If the FCA has missed anything out in the individual sourcebooks, Consumer Duty will pick up everything with an emphasis on consumers and what they buy, how they buy it, how they are serviced and an overriding duty on firms to deliver against four fixed outcomes.”

These outcomes surround product offering, pricing visibility and understanding what is on offer, as well as making sure they are assessed as “fair” – by focusing more on the consumer, it marks a change for general insurance and the whole financial sector.

Concluding his thoughts, in terms of products and services, Bjelobaba remarked that overall, they need to be designed “carefully and with no ambiguity going forward.”

“There was lot of ambiguity during the last two years with commercial insurances on business interruption that were forced to close because of the lockdown and a huge amount of ambiguity which is still going on,” he explained.

“That’s not good if your life depends on this operation, you don’t want any ambiguity.”

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