Code of conduct for sales of insurance products 

Disclosures prior to conclusion of an insurance contract

Before conclusion of an insurance contract, insurance companies must provide prospective policyholders with any such information as is necessary for assessment of insurance needs and choice of policy. It is important that customers receive sufficient information to enable them to assess the suitability of the policy offered and the scope of insurance coverage and to compare the various options available.

In assessing insurance needs, the insurance company must also generally explore whether the policy offered will overlap with existing policies. Information necessary for the choice of policy includes details of available insurance products, premiums and policy terms. 

The customer must also be made aware of any essential restrictions in insurance coverage. For example in the case of travel insurance this means that the company must identify any countries that are not covered by the insurance, while, in the case of liability insurance, the company must, for example, inform the prospective policyholder of a clause stipulating that no damages become payable for a loss relating to borrowed property or property deposited for safekeeping.

The information to be disclosed by the insurance company in individual sales situations depends on the nature of the policy and the circumstances for taking out insurance. If the insurance policy is sold to the consumer online, by mail, by phone or in any other form of non-face-to-face contact between the customer and the representative of the insurance company, the insurance company must also provide the customer with preliminary details of the company, policy, insurance contract and legal remedies defined in the Consumer Protection Act.

Disclosures after conclusion of an insurance contract

After conclusion of an insurance contract, the insurance company must, without undue delay, provide the policyholder with the policy document and the terms of the policy. The policy document includes details of the principal contents of the insurance contract, such as contracting parties, form of insurance, term of policy, premiums and any other special conditions of the policy.

The insurance company should inform the policyholder annually of the amount insured and any other details that are of obvious significance to the policyholder. This annual customer report should include information, for example, on the insured object, the contents of insurance coverage, the premium, the deductible and the surrender value and beneficiary clause of a life policy.

Claims handling and services

Claims handling is an integral part of the insurance business. Claims handling and services vary considerably in content, depending, for example, on the type of insurance and the contents of the insurance contract. In life insurance, claims handling, in its simplest form, means that the insurance company pays the sum of compensation to which the beneficiary is entitled under the terms of contract to his or her account. In the case of other voluntary life policies and property policies, the insurance company often exercises a broader role in claims settlement, claims handling and service provision.

Contacting the insurance company

The customer generally contacts the insurance company when a loss has occurred. If necessary, the insurance company then advises the customer on the contents of the policy and the claims process. The company explains to the customer what information he or she should submit for claims handling. The customer should also be informed of the period of limitation on filing claim and its significance. If compensation may be claimed under many different policies for the same contingency, the insurance company should explore these options and related procedures together with the customer. The aim is that the customer receives all the benefits to which he or she is entitled under the law and the insurance contract, irrespective of whether he or she knows how to apply for them.

Payment of damages

The insurance company must pay the damages swiftly and not later than within one month from receipt of the necessary information for payment of the damages. If the amount of damages is under dispute, the insurance company should always pay the undisputed amount of the damages and, at the same time, inform the customer that acceptance of the undisputed amount has no bearing on his or her entitlement to any additional compensation. The customer must also be informed of any delays in claims handling and their causes. The insurance company should, at its own initiative, pay penalty interest on delayed compensations, as stipulated under the law and the terms of the contract.

In order to fulfil its liability for damages under the insurance contract, the insurance company may turn to its cooperation partners for assistance in claims settlement and claims handling. For example in the case of motor vehicle insurance, damage to a vehicle may be surveyed by the insurance company's loss surveyor, or it may be surveyed and repaired in a repair shop designated by the insurance company. In the case of home insurance, for example a humidity survey may be undertaken for adjustment of the loss suffered. In the survey of the loss, the surveyor establishes the nature of the loss and makes an assessment of the amount of the loss. If the reason for the loss is known, the surveyor may also issue a preliminary opinion on the coverability of the loss and the appropriate remedial measure or action. Survey of a loss does not constitute a promise of coverage of the loss under the policy, but the insurance company always separately takes a claims decision on the loss suffered.

In connection with the survey of the loss or otherwise, the insurance company must ensure that the customer is aware of the insurance company's role and liability in a claims situation. The customer should, for example, be made aware that he or she is party to the repair contract made with a car repair shop or other company, although the bill is paid by the insurance company. Hence, the customer is also responsible for supervising the repair work.  Correspondingly, the provider of medical expense or voluntary workers' compensation insurance should inform customers if some medical treatment insured under the policy is conditional upon obtaining a payment commitment from the company in advance.

24 October 2011