In early October, the Office of the Financial Supervisory Commission published the UKNF’s position on the implementation of the basic duties of an insurance distributor. This position, is the result of supervisory and control activities carried out by the authority in the field of insurance distribution practices for consumers on the market. In the document, we can find the supervision’s expectations in terms of determining the requirements and needs of the customer, including with regard to entrepreneurs excluded from the regulation of the Insurance Distribution Act, as well as the implementation of information obligations regarding the insurance product.
One of the most important duties of an insurance distributor is to conduct an analysis in terms of the customer’s requirements and needs with regard to the insurance coverage they are seeking. The insurance product proposed to the customer should be consistent with such an analysis. The law itself, other than establishing an obligation, does not define the manner in which the distributor should conduct this analysis. Thus, distributors may, in principle, decide for themselves how to obtain the necessary information from the customer. However, this method should take into account the expectations of the FSA in this regard.
First of all, the supervisor points out that merely stating the intention to conclude an insurance contract is not yet the realization of the requirement to conduct a needs analysis. The distributor should pay attention to the types of risks that the customer intends to cover, and then to the limitations and exclusions of the insurance company’s liability. The conduct of these activities must be documented and archived in such a way that it is possible to demonstrate them both before the customer in the event of a dispute and before the UKNF during an inspection. At the same time, the mere submission of a statement by the customer that the purchased product is in line with his or her needs cannot be the sole evidence of the implementation of these activities.
Another obligation highlighted by the UKNF is the need to present to the customer, in an understandable form, objective information about the proposed insurance product. In the case of property insurance, this information is to be presented in the form of a standardized document (the so-called “IPID”), which is prepared by the entity creating the insurance product (so, in principle, it will be an insurance company). This information, according to the law, must be presented in paper form. If this information is made available in the form of another durable medium or through a website, additional prerequisites specified in the law must be met. In the opinion of the FSA, the correct implementation of the obligation to make information about an insurance product available involves allowing the public to become acquainted with it at a sufficiently early stage before concluding a contract and after examining its needs. According to the position, “the correct process of concluding a contract should therefore proceed in such a way that, after determining the customer’s requirements and needs, on the basis of the information provided by the customer, the IPID document is provided to the customer, which will enable him to make an informed decision about concluding an insurance contract.”
With regard to the implementation of the above obligations, the supervisory authority pays particular attention to the need for the distributor to ensure a three-stage scope of control over the implementation of the statutory requirements.
In the case of entrepreneurs referred to in Article 2 (1) and (2) of the Law on Distribution, i.e. those to whom the provisions of the Law do not apply, it is the responsibility of the insurance company on whose behalf they operate to determine how to implement the above obligations. These rules should result from the civil law contract concluded. It is also incumbent on the insurance company to verify the correct implementation of the sales process.
The implementation of the above, but also of other statutory obligations, may be subject to inspection by the UKNF, so it is worth reviewing your practices. Taking into account the guidelines will allow it to pass smoothly and avoid negative consequences.
If you are interested in more detailed information in relation to the scope indicated above, please feel free to contact us directly.
Aleksandra Billewicz, Lawyer, Tel. +48 606 711 669 , e-mail: aleksandra.billewicz@rsplegal.pl
