Insurance industry must engage with customers to avoid falling foul of Insurance Act, warns GMC Software. New legislation makes two-way exchange of information critical

Insurers need to make customer communications a two-way process so they are not caught out by the introduction of The Insurance Act 2015 on August 12th, customer and employee engagement expert GMC Software has warned. With the new legislation including a ‘duty of fair presentation,’ ensuring all parties have a proper understanding of risk and the factors involved, insurers will have to place a greater focus on communicating with their customers than ever before. Fair disclosure and presentation of information has to occur from both sides, with insurers and their customers needing to share the right information at the right time. The onus will be on insurers to make information clear and readily available to customers; to make clear to customers what information both parties have to share, and when; and to be able to prove they are doing so.

“Like the Consumer Insurance Act before it, the Insurance Act 2015 forces insurers to treat customers as partners, to share more information and to provide understandable advice,” said Simon Perry, insurance subject matter expert at GMC Software. “Facilitating two-way customer engagement has become critical. Insurers must be proactive, ensuring that customers know what services are available to them; what information they should be sharing with their insurer; and the easiest way for them to do so. More than ever before, it’s crucial that information is clear, accurate and acted upon in good faith. The days of insurers using a rigid set of traditional communication platforms to share one-way messages is over: they must be able to engage with their customers over any channel, whether that’s telephone, email or messaging applications.”

Dubbed “the biggest reform to insurance contract law in more than a century” by the Government, the new rules around sharing of information and providing documents also mean insurers’ internal communications must be accurate.

Insurers and their agents, or brokers, are now considered to have known, or ought to have known, something if a single employee knows it, and should have reasonably passed on that information: or if the information is held by the insurer and could be seen as readily, or even publically, available. Ultimately, this means that a failure to communicate internally could make the insurer responsible for critical information not being shared.

At the same time, insured customers must be given a platform to disclose any information that the customer either knows or should know; or, at least, notify the insurer that it should make further enquiries to find out the customer’s circumstances. A failure to provide such a platform could lead customers to choose insurers who make disclosure a simpler, more transparent process.

“Whatever form the conversation takes, it’s crucial that the options customers have on the table, and the risks associated with them, are easy to understand,” Perry continued.

“Making this crystal clear, and engaging customers in a two-way communication process will allow all departments within an insurer, such as sales, marketing and  claims, to prove they are fulfilling the terms of the act, and ultimately increase the likelihood of customer renewals. Customers can vote with their feet; even if an insurer is obeying the letter of the act, their customers are likely to choose alternatives that make the process easiest for them.”

Simon Perry, Insurance Expert at GMC software expressed his views as well:

“The Insurance Act 2015 ushers in substantial changes to the laws governing disclosure in both business to business insurance and commercial insurance and reinsurance, while also clarifying ambiguity residing in current legislation.

“As such, customers will be able to make better-informed policy-related decisions: they will be thought of more as partners to insurers in this new environment, something which is a key aspect of this new legislation. The crux of the issue is communication: insurers need to both be clearer with information and make it easier to share it with customers; and ensure that those customers understand what they have to share with the insurer, and how.

“Insurers can only ensure communication meets both the letter, and the spirit, of the new act if they involve customers in the process. Otherwise, while they might follow the letter of the law, customers are likely to seek other options.”

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