May 28, 2013
Following 18 months of extensive industry consultation, the Financial Services Council (FSC) has revised its guidance on the handling of the transfer of insurers for group insurance policies.
The purpose of Guidance Note 11: Group Insurance Takeover Terms (GN11) is to provide guidance to insurers when cover under a group insurance policy is transferred to a new insurer; in particular, to specify when an incoming insurer becomes responsible for claims.
GN11 sets out the following key points:
- Members will be accepted by the new insurer (incoming) on terms that are no less favourable than provided by the previous insurer (outgoing)
- The outgoing insurer has 90 days to provide the incoming insurer with proof of previous group arrangements, including individual acceptance details
- Premiums are payable to the incoming insurer on and from the takeover date
- The outgoing insurer is responsible for the payment of existing claims up until midnight on the day before the takeover date; the incoming insurer is responsible for claims which arise on or after the takeover date
- The incoming insurer is liable for the terminal illness claim of a transferring member except where the ‘date of certification’ is before the takeover date, in which case the outgoing insurer is liable for the terminal illness claim
- In the case of TPD and GSC cover where the member is not at work on the day before the takeover, the incoming insurer is to provide ‘new events’ cover, until the member returns to work. The outgoing insurer provides TPD or GSC cover which is not ‘new events’ cover until the member becomes fully covered by the incoming insurer (ie: when they return to work).
The Guidance Note also provides recommendations for the treatment of disputed claims.
The FSC’s Guidance Notes are used as best practice guides for the industry, and all registered companies are encouraged to adopt the provisions.
GN11 applies from 1 June 2013. Click here to view the Guidance Note in its entirety.