Clarification on broker responsibilities under new FCA Renewal Transparency rules
21 March 2017
21st March 2017: General insurance provider, Berkeley Alexander, alerts brokers to the impact of FCA Renewal Transparency rules that kick in on 1st April, relating to new responsibilities for brokers.
Under the new rules the FCA requires brokers, along with all other ‘insurance providers’ to mention, at each renewal, that a retail customer (but not a commercial client) may want to look for cover with an alternative provider, and on the fourth and any subsequent renewal period that clients are actively encouraged to shop around. This is in addition to the rule that at each renewal, retail customers must be provided with the previous year’s equivalent annual premium in order that they can more easily identify any price rise.
It is anticipated that most insurers will be including the required premium information on their renewal documents, but of greater consequence to brokers perhaps is the requirement that brokers, not just insurers, must encourage clients to shop around.
Geoff Hall, Managing Director at Berkeley Alexander, comments: “At first glance this seems to jeopardise both the adviser/customer relationship and the adviser’s GI business pipeline. In response to this, we are amending our renewal invitation letters to take care of the notification issue, so our advisers don’t need to worry about this added layer of regulation. Our advice to brokers is to check with your GI provider that they can do the same otherwise you will need to take steps to meet the FCA’s demands.
“There is a risk that clients, encouraged to shop around, will look elsewhere and this underlines the importance of having a large panel of providers and products available and staying in touch with clients at renewal. Some “single product” providers may well have restricted means of helping customers to switch, especially where the client’s circumstances have changed. Retaining the client is the main concern, and choice will help advisers to do that.”
