In the first part of our Q&A with Car Care Plan’s Head of Compliance, Gavin Tinch, he gave us background information on the Insurance Distribution Directive (IDD) and explained new rules surrounding Continuing Professional Development. Click here to read the first part of our interview.

In part two, he explains the Insurance Production Information Document (IPID), new rules surrounding information on insurance manufacturers and retailers and changes to Advised and Non-Advised Sales rules.

What is the Insurance Product Information Document?

The IDD introduces a new document, called the Insurance Product Information Document (IPID). The requirements of the IPID are set out in the FCA’s handbook.

The IPID replaces the current Policy Summary Document, which is commonly used within the motor industry when selling insurance products. However, as the IPID is a document that has to follow a prescribed format and include specific information, you may still decide to use a summary document or sales leaflet to provide consumers with additional information.

The IPID must contain:

  • Information about the type of insurance;
  • A summary of insurance cover, including the main risks insured, the sum insured, the geographical scope and summary of excluded risks;
  • The means of payment of premium and the duration of payments;
  • The main exclusions where claims cannot be made;
  • The obligations at the start of the contract;
  • The obligations during the term of the contract;
  • The obligations in the event that a claim is made;
  • The term of contract including the start and end date of the contract;
  • The means of terminating the contract;
  • The company/brand name;
  • A reference that complete pre-contractual and contractual information about the product is provided in other relevant documents.

Each section should be headed by icons or symbols visually representing the content of the respective section heading.

Car Care Plan has completed IPID templates for all products. These will have to be used for all product sales from 1st October 2018 but can be introduced sooner. Please speak to your usual Car Care Plan contact about when and how to introduce the IPID.

What about new rules on providing information about the firm, its services and remuneration?

The IDD brings in new requirements surrounding the information you provide to your customers about your firm, the services you offer and how you are remunerated. Further information can be found in the FCA’s handbook.

Although it’s no longer a prescribed form, many retailers still use an Initial Disclosure Document to provide the customer with the required information.

From 1st October 2018, you should ensure that, prior to the conclusion of a contract of insurance, the customer is provided information on:

  • The firm’s identity, address and confirmation that it is an intermediary;
  • Whether the firm provides advice about the products sold;
  • The complaints procedure;
  • The fact that the firm is included in the Financial Services Register and how to verify this;
  • Whether the firm is acting on behalf of the customer or the insurer;
  • Whether the firm has a significant (10%) financial interest in a given insurer or an insurer has a significant financial interest in it;
  • If the firm is a tied agent and if it gives advice based on a fair and personal analysis (of a sufficiently large number of insurers);
  • The nature of remuneration received in respect of the insurance contract;
  • Whether the firm works on a fee, commission or other basis;
  • The amount of fee if paid by the customer.

Are there any changes to Advised and Non-Advised Sales rules?

The Directive also brings in some changes to the standards for advised and non-advised sales.

  • An explicit requirement that all contracts proposed must be consistent with the demands and needs. This is for both advised and non-advised sales.
  • Also a requirement that firms who advise must provide a personalised recommendation explaining why the product recommended best meets the customer’s needs.

 

Current Example

Post 1 October 2018 Example

Based on your demands and needs, I recommend that you purchase Asset Protection Insurance to provide protection in the event your vehicle is written off by your motor insurer. Based on your demands and needs, I recommend that you purchase Asset Protection Insurance to provide protection in the event your vehicle is written off by your motor insurer.  This best meets your needs as you have highlighted that you would like to be in the position to purchase a replacement vehicle of similar quality should your current car be written off.

 

The following links provide further information on the requirements surrounding advised and non-advised sales.

Keep an eye out for Part Three of our interview with Gavin by signing-up to our newsletter here or you can follow our company LinkedIn page here.