Mr Edward Jones (May 3) raises a number of interesting points in his letter and I am surprised that I have not seen more comment on the subject.
Most of the correspondence on GISC seems to be centred on the politics of the issue, rather than on what it means for the customer and for the people who actually deal with the public. GISC adherence has considerable training and competence implications, which will test many members. It is, however, good news for any young person wishing to make a career in insurance.
First of all, I can assure Mr Jones that the GISC Rules define “private customer” very clearly and he should have no difficulty on that side. However, I do share his concern over the “cooling-off period”. Strictly speaking, it runs 14 days from when the customer has received certain information (PCC S.3).
This could be some considerable time from inception, depending on how long the broker or the insurer takes to respond to queries or to issue documentation, for example. The stance which Mr Jones reports Axa as taking is provided for in GISC rules, which state inter alia if the customer has been given sufficient information on the product, then the cooling-off period does not apply (3.10).
While I believe the cooling-off period principle works relatively well in life assurance, I have reservations in the general field where we are dealing with multi-peril, multi-sectional contracts, some of which involve elements of compulsory insurance.
The requirement to communicate the main features of products and services is one of the most important and challenging components of the code. However, when linked to a cooling-off period, or option to quit, then it leaves companies and brokers vulnerable.
How do brokers and companies decide what information they need to provide? It is possible that information one customer considers irrelevant would make another customer reject the contract altogether.
In the event of a dispute, how will the industry be able to prove one way or the other as to how much information was given, unless we tape every single call? If we think about it, does the remedy need to be rescission of the policy? If there is something that the customer does not like, can it not be remedied by rectification?
Many of us are worried that we may be letting ourselves in for a new insurance character – a “serial cooler-off”, who flits from company to company, living on cover notes.
From the customer's side, I am a little worried that making a claim invalidates the cooling-off period. Let us look at the customer who incurs a potential third-party liability within days of inception. He has no option but to notify the insurer of the incident. When he receives his information, he finds that the policy is not what he expected – is he stuck with the policy for a year?
Mr Jones, welcome to the GISC – there are a few problems, but we will get over them.
Roy Rodger FCII
Consultancy and Training
What a coincidence
It was interesting to read in your lead article about I2i-link that “other insurance companies are thought to be nervous about the access their rivals could have to their data”. This surely is only one part of a major problem.
As I understand it, if a broker requests a quotation, then the date for that quotation will be sent simultaneously to all the insurers on the system. This means that every insurer will capture the data of that particular client.
Only one insurer can be successful in writing the business, but the others will still have that data in their possession. What a wonderful way to build a data base of brokers' clients. It is also interesting that all the insurers involved, with the possible exception of Groupama, have direct marketing divisions.
What a coincidence – or am I perhaps being cynical? If this is indeed the way in which it will work, then surely brokers have a lot to fear from the predatory marketing of the direct insurers involved.
Association of Quotel Users.
Re: private customers and the cooling-off period
The General Insurance Standards Council (GISC) requirements to give information to a private customer prior to commitment of purchase (defined in the Rules) are similar to the requirements under the Association of British Insurers (ABI) Selling Code. The GISC Rules apply equally to both insurer and intermediary members where they are selling to private customers.
The Rules do not require a member to give a cooling-off period on sales to a private customer as a matter of course. However, Rule C3.9 of the Private Customer Code states that a 14-day cooling-off period must be given if the private customer has not received enough information and help from a member to make an informed decision before final commitment to buy an insurance policy.
The rule requires that if any of the information under C3.1 (Explanation of service), C3.3 (Information about products and services), C3.4 (Information on costs) or C3.6 (Customer protection information) is not provided at point of sale, then the private customer is entitled to a 14-day cooling-off period. It is expected that the requirement to provide a cooling-off period will be by exception, with most members being able to comply with the requirements at point of sale.
Where all appropriate information has been given, a member would not be obliged or expected to give a cooling-off period. However, there is nothing to prevent a member giving a cooling-off period if they want to, even where all appropriate information has been given.
Head of policy
Rooting out the Devil
I disagree with Simon Hayes (Devilish ways, May 3) that his story says it all.
Why does he generalise so dramatically by associating sales with the Devil and telling lies? This is such a one-sided and, frankly, dated view of what selling really is. His experience suggests poor implementation of a dual structure and poor client communication – not a problem with the structure itself.
There are many failed brokers out there that failed because they weren't sales people. They got so bogged down trying to manage relationships they didn't plan for tomorrow. They sat there, waiting for customers to come to them. I am amazed at the number of brokers whose sales and marketing plan adds up to nothing more than “word of mouth”.
To me, Tony Cornell was correct in stating that the roles and skill requirements of hunters and farmers are different. Yes, occasionally you get a successful individual who can do both. However, ask anyone in the recruitment business – such people are rare and invariably expensive.
Time pressure is also a major problem. I'll confidently predict that those people who build up a good portfolio of clients will neglect their new business responsibilities because of client demands. The short-term urgency of dealing with the clients prevents them from attending to the long-term importance of securing new clients. I know, because I have fallen into the trap.
And why such a negative spin on specialisation? You explain to the client what will happen. Clients are not dropped by the sales person when the business is won. They are handed over in a professional, planned and orderly manner to experts in insurance who can concentrate on the client's needs, not the brokerage's. They are not encumbered by the pressures of looking for new business.
By the way, I am not a broker or insurance expert. I speak as a client of many brokers over the years, and as a specialist in sales and account management in the financial services industry.