The Life Code Compliance Committee has published a reminder for life insurers about supporting customers experiencing vulnerability, and their representatives, after one insurer was found in breach of the Code.
The Compliance Reminder uses a real case study to show how delays, repeated requests for information, inflexible identification processes and missed signs of vulnerability can create unnecessary barriers for customers and the people helping them.
In its case study the LCCC notes that under the Code, insurers commit to take extra care to support customers experiencing vulnerability, and to identify when customers may need extra support.
It found breaches by one insurer in failing to provide that support.
“For one insurer, community lawyers and financial counsellors represented customers experiencing vulnerability. They provided the insurer with authority forms and requested policy information to assist the customers.”
… the insurer was inflexible in recognising the authority and verifying identities…
However, it says that in response, the insurer was “…inflexible in recognising the authority and verifying identities. It repeatedly requested documentation, requiring certified identification in some cases, and delaying access to the information the representatives needed.”
The LCCC says the insurer’s handling of these requests varied across cases. “In one case, the insurer’s administrative error led to repeated requests and avoidable delays. In another, the insurer required amended forms for a minor name discrepancy and only adjusted its approach after it received a complaint.”
It found that the insurer “…created avoidable barriers by delaying its acceptance of representatives’ authority, repeatedly requesting documents already provided, and imposing unnecessary identification and verification steps. We found these to be breaches of the Code.”
…the insurer also failed to respond to clear signs that the customers may have been experiencing vulnerability…
It says the insurer also failed to respond to clear signs that the customers may have been experiencing vulnerability, or to take reasonable steps to provide extra support and flexibility.
As to why this matters, the LCCC says insurers have committed to act flexibly and take reasonable steps to support customers who need assistance to meet verification requirements, while still meeting legal obligations.
…When insurers don’t take these reasonable steps or do not have flexible processes, they cause unnecessary inconvenience, delay, and distress…
“When insurers don’t take these reasonable steps or do not have flexible processes, they cause unnecessary inconvenience, delay and distress.”
The LCCC says when insurers identify that a customer may be experiencing vulnerability, it expects them to take extra care and ensure their processes are flexible, efficient and responsive.
This applies to insurers and their distributors, whether they deal with the customer directly or through a representative.
It says to avoid unnecessary delays or inconvenience, where appropriate, insurers should:
- Promptly recognise third-party authorities
- Avoid repeated or unnecessary identification and verification requests
- Apply flexible processes where verification or identification is required.
Click here for the full Compliance Reminder.
