When consumers buy insurance, they are protected by the Fair Consumer Roadmap and Policyholder Protection Rules which are part of the Long and Short Term Insurance Act. Insurance is a revenge purchase for consumers and they often consider canceling their insurance if their claims are not paid or when they need to cut costs due to the current difficult economic climate.
However, if you canceled your insurance because you were disappointed with the way your claim was handled or you think you can’t afford to pay it back, consider this: if your car is uninsured and stolen, there will be no insurance payout. Also, you still have to pay off the loan you took out to buy the car. You now have to pay the bank back and you can’t afford another car. How can you get to work or take your children to school?
Therefore, it is better to be insured against unexpected events and the more you know about insurance and how you are protected as a customer, the easier it will be to navigate the insurance space.
The difference between the Roadmap Treating Customers Fairly (TFC) and the Policy Holder Protection Rules (PPR) is that the TFC was implemented in 2011 to inform financial services stakeholders about the approach intended by the Financial Sector Conduct Authority (FSCA) in its implementation. A “Treat Your Customer Fairly” approach to the regulation of the retail financial services market in South Africa.
The PPR was implemented in 2018 to protect the integrity of the TCF and ensure that there are rules to enforce the legislative side of the TCF, explains Claire Klassen, consumer financial education specialist at Momentum Metropolitan.
Is treating customers the same as being polite to customers? “TCF has nothing to do with being polite to customers, but the goal is to ensure that consumers understand the products they choose after the financial consultation process with financial advisors. TCF is the center of the organization’s corporate culture.
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Treat customers fairly
Klassen said the TCF is an outcome-based regulatory approach that seeks to ensure that financial institutions provide specific and clear fairness outcomes to consumers of financial services to address the unique consumer risks of financial products and services.
Six principles form the pillars of TCF that must be implemented by financial service providers to ensure the protection of potential and existing customers and have the desired results:
- Customers are confident that they are dealing with a company where the fair treatment of customers is the center of the company’s culture.
- Products and services marketed and sold in the retail market are designed to meet the needs of identified and targeted customer groups.
- Customers get clear and timely information before, during and after the contract.
- If the customer receives advice, the advice is appropriate and takes into account their situation.
- The customer gets a product that performs as the company expects and the associated service as an acceptable standard and what they expect.
- Customers do not face unreasonable post-sale barriers to change products, switch providers, submit claims or make complaints.
The three desired end results are improved customer confidence, appropriate supply of products and services and better transparency and discipline in the industry.
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Policyholder protection rules?
Policyholder protection rules (PPRs) are regulations that apply to short-term insurance companies and to some intermediaries to ensure that the interests of insurance policyholders are protected and that insurance companies, distribution channels and other regulated entities fulfill their obligations to policyholders and have in place standard procedures and best practices in the sale and service of insurance policies.
What does PPR mean for consumers? Klassen said that after the PPR was implemented in 2018, consumers were considered higher than the sales process and it was no longer about getting commissions or money for financial advisors, but about giving appropriate advice and not bombarding consumers with advertisements in languages they do not practice. understood.
PPR contains 20 rules. Here are some of them:
Rule 1: Regulatory remedies for policyholders
Insurers must act honorably, professionally and fairly in all cases when dealing with policyholders or potential policyholders. When the insurer first contacts you, they should immediately explain what it is about.
Insurers must also have proper processes and procedures in place to ensure that policyholders are treated fairly to ensure that:
- can count on working with insurance companies where the fair treatment of policyholders is at the core of the company’s culture
- products are designed to meet the needs of specific types and categories of policyholders and should be directed to specific groups.
- get clear and well-informed information before taking out a policy, during that period and beyond
- receive appropriate advice for their situation
- get a product that performs according to the expectations created during marketing and the services you want are created
- do not face unfair obstacles when you want to change or cancel your policy or file a claim or complaint.
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Rule 2: Product design
When insurance companies design their insurance products, they must ensure that they meet the needs of a specific group of policyholders so that they are not sold to people who have no value.
Rule 3: Credit life insurance
Insurers cannot offer compulsory credit life insurance policies that do not comply with credit life insurance regulations promulgated by the minister of trade, industry and competition.
Rule 4: Right of cooling-off
The policyholder can cancel the policy if he has more than 31 days and has not received the benefit or claimed or the event insured under the policy has not occurred, within 14 days after the date of receipt of the policy contract and the insurer must refund all premiums or money paid, subject to deduction of costs any risk cover is actually enjoyed. Insurers must respond within 31 days and this rule only applies to new policies and variations to existing policies.
Rule 5: Negative options
The insurer and its representatives cannot, if the policyholder has more than one option, determine which option applies unless the policyholder expressly indicates that he does not want to do so, unless required by law or the insurer can prove that it is necessary for the fair treatment of the policyholder. This should also be shown to the policyholder. This rule applies to new policies or changes or updates to existing policies.
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Rule 6: Fix the premium
Insurers must establish a fair premium that balances the interests of the company with the interests of consumers and cannot charge a fee higher than the premium, except for a fee that is part of the policy or permitted by law. Additional fees must be disclosed to the consumer. This rule applies to new policies or changes or updates to existing policies.
Rule 10: Advertising
Insurers must follow procedures that determine whether senior managers approve advertising and take reasonable steps to ensure that advertising complies with this rule. The person who designed the advertisement may not have approved it. If an advertisement appears to be in violation of this rule, the insurer must immediately withdraw or correct it and notify all persons relying on the advertisement.
Advertisements must be factually correct, give a balanced representation of important information and not mislead people. Also should not disproportionately inflate benefits or create unrealistic expectations and should include restrictions, exclusions, risks and fees and not make them sound like benefits.
All parts of the advertisement should also be the same so that some parts of the information are not more important than others. Advertisements also do not use words that encourage consumers to make decisions based on urgency. The name of the insurance company should be clearly indicated and simple language used in advertising and complex terms should be defined so that consumers can understand them.
When using telephone or voice or text messages for advertising, the insurance company must give the consumer the opportunity, without paying a fee, to opt out of receiving advertising in this medium.
Rule 14: Continuously evaluate product performance
Insurers must constantly monitor their products to ensure they meet your needs and provide value for money.
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Rule 17: Management of claims
Insurers must have a system in place to manage claims that meet certain requirements. All communications with the claimant must be in plain language and indicate what information the insurer wants, where, how and with whom the claim can be submitted and how quickly the claim must be submitted. Claimants should be informed of how the insurance company is progressing with claims, the reasons for delays and the insurer’s decision on claims.
Rule 18: Complaints
Insurers must establish a proper and effective complaints system to ensure that complainants are treated fairly, which must comply with certain requirements.
Rule 19: Termination of policy
If the insurer suspends the short-term insurance policy in cases not related to unpaid premiums or changes in risk or suspension by law, the insurer must continue to cover 31 days after receiving proof that you are aware of the suspension or the period until proof is received if you have other insurance, whatever the shortest.