Thu | Oct 29, 2020

Cedric Stephens | Elevating the insurance consumer

Published:Sunday | February 17, 2019 | 12:00 AM


The staff in the Financial Services Commission’s insurance division and its leaders earned applause last week.

They have started a process to modernise the ways in which the $107 billion insurance industry that they regulate transacts business with consumers.

The changes, which were predicted in my column ‘Finally, Insurance Reform with Upsides for Consumers’ last September, were overdue.

In the words of one company executive who was speaking about his industry, it is “moving forward at a rapid rate”.

The daily, consumer-facing actions of insurers and intermediaries − brokers and agents – for the most part, are out of step with 21st-century ideas about how businesses should treat customers.

Making money – no matter what – is the hidden motto. Treating customers unfairly is the reality, as was shown in T.M.’s recent interactions with his broker in last week’s column.

Few persons will visit the regulator’s website – – to read the 13-page document ‘Market Conduct for Insurance Companies and intermediaries’.

Today’s article will highlight parts of the FSC’s new rules about how consumers should be treated.

Also, publication of the rules is only one part of the process to change how consumers are treated. The protocols will only be effective if buyers and policyholders familiarise themselves with the procedures and make demands for improvements when service delivery is sub-par.

Filing written complaints with the insurer, intermediary and regulator, when all other measures to seek redress fail – excluding the appointment of an attorney – is another important set of actions that consumers can take.

They will force the service provider to obey the rules or face sanctions. Effecting changes to how insurers and intermediaries treat all customers is a shared responsibility and will take time.

Market conduct defined

First the basics. Market conduct, according to the document, “refers to all strategies, policies, activities, systems, practices and measures that are executed or performed by insurance companies and intermediaries in the ordinary course of business, prior to parties entering a contractual arrangement and until all obligations under the contract have been satisfied, to ensure that all customers are treated fairly”.

This and all the other rules apply to life and non-life or general insurances – no exceptions.

Market conduct “strategies, policies, activities” begin before the contract is entered into and end when all contractual obligations have been discharged. This statement, implicitly, will force the service provider to ensure that the consumer-provider interactions do not end with the making of the sale.

The market conduct rules or guidelines were prepared to ensure that each insurer and intermediary:

● Act with high standards of integrity and fair dealing in the conduct of its business;

● Act with due care, skill and diligence when dealing with customers;

● Promote products and services in a manner that is clear, fair and not misleading;

● Have policies and processes in place to handle complaints in a timely, fair and effective manner;

● Have policies and processes in place to handle claims in a timely and fair manner;

● Obtain sufficient information about the customer to assess his/her insurance needs and treats confidential information as such; and

● Communicate relevant and meaningful information to policyholders in a timely and comprehensive manner.

These points are very important. They provide yardsticks that consumers can use to judge, in general terms, how employees of the insurer or broker perform their jobs for the consumer. They can also be used to make opening arguments for the filing of complaints.

Integrity and Fair Dealing

Section 4.0 of the market conduct document outlines standards for integrity and fair dealing, including:

● Implementing recruitment policies that ensure the employment of persons of the highest calibre;

● Developing charters, setting out standards of service that is to be delivered to policyholders and monitor the quality of service being delivered by their staff members;

● Giving fair and equal treatment to all policyholders and are not to make or permit any unfair discrimination against any person or persons, in respect of premiums charged, limitations placed on sums insured, or by refusal to renew an insurance contract;

● Communicating relevant information to all policyholders in a timely and efficient manner;

● Not engaging in unfair trade practices;

● Insurers ensuring that intermediaries comply with their policies and procedures;

● Intermediaries are required to ensure that all premiums are paid to insurers on time; and

● Monitoring the progress of all claims while giving professional assistance to the policyholder, adjuster and insurer, to facilitate efficient and just settlement.

Care, skill and diligence

The application of care, skill and, diligence are important parts of insurer-broker-consumer interactions. Section 5 makes the case:

● Insurers and intermediaries should conduct their business activities with due care, skill, and diligence ensuring that policyholders are adequately informed and given full explanations of the nature and effect of all provisions in insurance policies issued and distributed by them;

● Directors and senior officers of insurers consider the interests of policyholders while discharging their duties to act honestly and in good faith in the best interests of the company;

● Insurers and intermediaries are required to develop, execute and maintain appropriate and up-to-date employee training policies, procedures and training manuals that are approved by the board of directors;

● Insurers must conduct training sessions at appropriate intervals to educate their sales representatives, agents and brokers about the nature and characteristics of all their insurance products;

● Intermediaries must ensure that their sales representatives are trained and equipped to adequately advise customers on the features and characteristics of all insurance policies that they sell;

● Life insurers should not issue any insurance policy unless that policy has been approved by the commission, in accordance with Section 90 of the Insurance Act. Insurers must comply with the guidelines established by the commission for the approval;

● Insurers and intermediaries have a duty of care to ensure that persons employed to solicit and negotiate insurance contracts are fit and proper persons and are registered by the commission;

● Insurers must conduct due diligence that provides satisfactory evidence that intermediaries which conduct business on their behalf are duly registered by the commission;

● Payment of compensation to an unregistered person for placing or negotiating insurance is a criminal offence under Section 85(2) of the Insurance Act;

● It is an offence for an intermediary to obtain payment of premium on an insurance policy by fraudulent representation or cause a policyholder to discontinue any insurance policy without reasonable grounds that the discontinuance would benefit the policyholder.

In part two to this article, I will complete my review of the remaining sections of the FSC’s comprehensive guidelines that will have far-reaching impacts on the insurance industry.


Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: