How a product is positioned is an incredibly important part of selling insurance and this can vary depending on which method of sale is required by the customer. Despite this, the fundamentals remain:
In order for customers to make informed decisions, they need to be provided with an appropriate level of information. The level of information required will vary according to matters such as:
As this needs to be provided to allow the customer to make an informed choice, it should be done before the conclusion of the contract/policy is purchased.
This means providing the appropriate information in a manner, so the customer understands their product before they buy it. For example, where the sale is completed online, providing the appropriate information at a reasonable stage of the online journey and prominent enough to draw attention to it.
This information is usually produced by the insurer and therefore you should arrange for that to be provided to you.
Fair value in distribution ensures customers don’t pay too much for their cover by requiring firms to understand the costs associated with the distribution of the policy. It also ensures that the breadth and quality of service is comparable to the price. This means that the risk price for the customer should bear relevance to the final price they pay.
AXA Commercial has engaged with our intermediaries to understand the services they provide to customers and set remuneration/commission levels which reflect that service. There remains an obligation for distributors to provide information to insurers which will assist them in undertaking their fair value assessment.
When a firm sells insurance on an advised basis, there are additional rules that need to be followed, these are:
As there is a greater risk of customer harm arising from advised sales, firms that want to sell on an advised basis require additional permissions from the FCA. If you do not have these permissions, you cannot offer advice on the products you sell.
Firms making non-advised sales should avoid answering questions in a way that could inadvertently give advice. Answering questions such as 'what do you think?', or 'which one is best?' could involve making a personal recommendation and therefore become an advised sale.