The Association of British Insurers has published of a new Code of Practice for the sale of long-term care insurance.
The Code, which is binding on all members of the ABI, comes into force on 1st January, 2003. The Code requires ABI member companies to treat the sale and marketing of long-term care insurance as if it were an investment product. It will be subject to changes in FSA rules for such contracts.
Under the new code:
Insurers selling long-term care insurance must be satisfied that financial advisers are competent in this area;
Insurers' own sales staff must be appropriately qualified and have detailed knowledge of the relationship between long-term care and the benefits system;
The dignity of the customer must be respected at all times;
Companies must provide an appeals procedure to be used if there is a dispute over a claim;
Unsolicited calling on potential customers is banned.
The publication of the Code follows an extensive consultation exercise. It replaces the previous ABI Code agreed in 1995.
Richard Walsh, head of health at the ABI, says: “Long-term care insurance is an important protection for many people. We want to ensure that customers are well protected in advance of FSA regulation in 2004 and that the industry upholds high standards. The Code will be an excellent model for the statutory regulation of long-term care to follow.”
Paul Smee, director general of The Association of Independent Financial Advisers, also welcomed the Code. He says: “The Code will provide valuable protection and reassurance to customers. Long-term care insurance shares many of the qualities of an investment product. It makes sense for this Code to be based on the same regulatory approach. Insurers have taken a very positive approach by adopting the Code. We now have an appropriate standard for the whole industry.”
The ABI's consultation on the Code was welcomed in June by Ruth Kelly MP, Financial Secretary to the Treasury, who says: “The Government welcomes this initiative to strengthen the ABI Code. Together with the extension of the role of the financial ombudsman, the revised Code should provide important reassurance for customers.”