Where Insurance Advisors Succeed

Article published on 22nd July 2008

According to the Financial Services Authority (FSA) most insurers undertake a stringent assessment of the protection needs of their potential customers before making a recommendation to buy a critical illness insurance (CII) policy.

Discussion of the customer's protection needs often formed a part of a wider review of the customer's circumstances in general to establish their priorities, such as mortgage repayments if the customer was unable to work. But where the insurers in question offered more than one CII policy, price was often the only factor used to decide which one to recommend. The FSA found that other factors, such as the conditions, illnesses and disabilities covered, did not usually influence their advice.

Most firms were also found to have reasonable controls to manage the risk of mis-selling products to customers. For example, they had good training programmes and risk based compliance monitoring. Likewise, the FSA found little evidence of 'pressure selling' and no evidence of advisers and sales staff trying to scare consumers into buying CII policy.

The FSA also found that there was evidence that advisors did consider whether other protection insurance policies might suit the needs of the customers better than the one they were applying for. Because of the way CII is sold, customers have time to reflect on their options before they commit themselves, as with prime mortgage payment protection products. The FSA found that this mulling period helped to reduce the risk that customers would make the wrong choices or buy in haste because their attention is on another product they are purchasing.



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