"These pricing rule changes in the GI space may ultimately favour the intermediary market, as many customers were previously using different channels to source their GI policy needs"
The FCA recently introduced new rules that require home and motor insurance renewal premiums to be set at a price no higher than would be offered to an equivalent customer at new business.
In response, Paradigm has provided further support and information to advisory firms around what is required, including two templates of questions that can be used with customers during the Buildings & Contents (B&C) renewal process.
The information from Paradigm – available at www.paradigm.co.uk/protection/support/GI-pricing - covers the background to the rule changes, how the new pricing rules will apply to firms, and what they should do to ensure ongoing compliance.
All firms who write GI business or earn commissions from renewals are impacted by the rule changes and will need to look at the commission levels earned, in conjunction with the work that has been carried out to affect the policy.
Paradigm’s B&C template questions are designed to ensure the advice provided on policies is appropriate to the customer at the time of renewal and help to demonstrate the work being carried out by the adviser.
Paradigm said one way of doing this is to ascertain whether the policy sold still meets the needs of the customer or addresses any changes that may have occurred over the previous year which might affect the policy.
The two templates of questions are for:
1. Advisers renewing B&C insurance policies where they gave the initial advice.
2. Advisers who are advising on existing policies where they haven’t given the initial advice, for example, if the customer arranged their own policy initially.
Paradigm said both provide useful guidelines for advisers around what they should do to justify the commission paid at renewal and will help the firm create the compliance file.
Mike Allison, head of protection at Paradigm, commented: “These pricing rule changes in the GI space may ultimately favour the intermediary market, as many customers were previously using different channels to source their GI policy needs and this might actually provide a more level playing-field for advisers to deliver this type of advice.
“However, they do require advisers to be on the ball in terms of their process and ensuring their ongoing compliance – this is why we have produced this information to support their activities in this area and to help deliver the right outcomes for them and their clients.
“Our template questionnaires are by no means definitive, but do provide a selection of questions for advisers and a rationale as to why they are asking clients for this information. Overall, we want to ensure our member firms have a range of support and information to ensure they can best meet the rule requirements and to ensure their ongoing compliance.
“At Paradigm we remain committed to helping advisory firms to grow their protection and GI business, helping them to open up new revenue streams and to find ways to assist clients, therefore keeping them off price comparison websites. We recognise now more than ever, advisers are faced with a more level playing field in this regard and we’ll be working closely with firms who need assistance to grow this area of advice.”
