Do you suspect unrealistically low prices at the outset closely followed by a huge hike just to increase profit margins? You’ll be glad to hear that the new advice from the Association of British Insurers on reviewable premiums has quashed the possibility of this happening.In 2002, when Swiss Re pulled out of the guaranteed premiums market for critical illness it left many providers unable to offer cover on guaranteed premiums which created a renewed interest in reviewable premiums. Although guaranteed premiums were still the bigger seller there was a marked increase in take-up of reviewable premiums. Because of this, the Financial Ombudsman Service recognised the importance of ensuring that when reviews came round, they were handled fairly. As a result the ABI, FOS and Financial Services Authority established a robust framework for dealing with reviews. The recent ABI advice on this focusses on the practical considerations insurers and advisers must take into account to ensure customers receive the best service and advice and have no reason to complain when reviews take place. The advice to insurers centres on making reviewable premium products transparent and fair. What this will mean in practice is that all insurers will have to have an auditable process for calculating premium increases and any rise must be for a valid reason and proportionate to that reason. Key here is that these reasons must be based on the realistic expectations of insurers. For example, if an insurer’s claims history was not what they expected as a result of substantial medical advances then the valid reason would be unforeseen advances in medical science. To ensure consumers are aware of why and when they should expect a review, the reasons the insurer will take into account must be stated in marketing material and product literature. As all insurers are under an equal obligation to apply increases proportionately and fairly, as an adviser you may want to look at this list of reasons in a fact-based comparison when selecting the most appropriate reviewable premium for your client. This should make it easier to recommend one reviewable product over another. As with all sales of protection the message for advisers is to make sure that all advice is clearly explained to clients and documented. Armed with this information clients will be fully aware of all aspects of their cover, which means they won’t get any surprises when a review comes up or when their premiums are raised.
Buy-to-let and commercial mortgage specialists The Money Centre processed almost 181m worth of buy-to-let mortgages in May, a 61% increase on the same time last year. Based on this monthly figure, The Money Centre is on target to exceed its annual target of 2bn. These figures show a 10% production improvement from sales consultants at […]
Brokers must do their research and help clients mitigate the risks of buying abroad as much as possible, say our experts
Grant Thornton says the World Cup has led to an unprecedented rise in personal spending, with 1m being borrowed every four minutes. The accountancy firm also says there is evidence to show that many debtors live well beyond their means. It warns that financial catastrophe can be expected when a big event – in this […]
Knight Funding is extending its flat rate 49 application fee and no valuation fee offer by three months to September 30 on all applications for Platform products excluding prime. Applicants would normally pay an application fee linked to the value of the property with a minimum charge of 200. The extension of Knight Fundings application […]
Protection providers often extol the benefits of placing plans in trust. The advantages for clients are widely recognised and numerous – inheritance tax mitigation, avoiding probate delay, controlling claim proceeds, and so the long, familiar list continues. Yet, dismissed as unnecessary form-filling, or simply viewed as irrelevant in the context of a mortgage sale, less […]
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