Disclosure is the keystone of insurance. Consumers are constantly told they must be completely open and honest.
Failure to disclose can and will be used as a reason to reject or scale down a claim.
So whether it is a wart on the nose, a pimple on the bottom, a child’s asthma attack or a no-fault shunt in a car park, we are expected to tell all.
Yet too often the insurance companies have operated disclosure like a one-way mirror.
While they want to see any aspect of our lives which might just possibly affect the cost of underwriting, they have all too frequently attempted to keep any nasties well hidden.
Take the cost of renewal. Some of us have argued for many years that insurance companies should be forced to put the cost of the previous year’s cover on the renewal quotation.
If they were as open and honest as they expect their customers to be then this should be a given. Instead they will finally be forced to do it by the FCA.
“Too often the insurance companies have operated disclosure like a one-way mirror” Tony HazellNaturally the FCA has decided it must dictate the form of wording because otherwise there is a risk that insurers will try to wriggle their way around it.
For example, I can imagine some might try to compare the new quotation offered with the original quotation provided the previous year rather than actual amount paid, which may well be smaller.
It is, of course, right that consumers should be honest with insurers. But it is equally right that insurers should be open with us. That still does not happen despite clearer disclosure documents – which also had to be forced on the industry by regulators.
Consumers see their premiums rocket because something in the so-called big data suggests that they are suddenly a higher risk.
Merely making an enquiry about a claim can trigger a premium rise whether or not a claim is actually made.
Being the innocent party in an accident can cause a rise because insurers have decided this makes us more likely to be a victim a second time – insurers do not believe that lightning does not strike twice.
Of course, many consumers do not know this, so they still innocently phone for advice without realising they will pay for this when their premium renewal comes through.
So, here is a thought insurance companies executives might like to ponder over the festive season. You expect your customers to be open with you, so why not try reciprocating?
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Pension mention incomprehension
With less than four months to go until the new state pension starts, confusion reigns.
I am now getting a steady stream of letters from readers wondering where they stand. This is hardly surprising when you consider the conflicting information on government websites.
Take the section on voluntary National Insurance that states: “You can usually pay voluntary contributions for the past six years.” Fair enough.
Having read this some people might go no further. They would have to read on to discover that men born after 5 April 5 1951 and women born after 5 April 5 1953 have until 5 April 5 2023 to plug gaps going back 10 years.
That is anyone who will not hit retirement age before 6 April – in other words, most people. All right, this is a window in which the norm has changed, but it is a rather big window, in the light of which the initial ‘six years’ statement is very confusing.
And, of course, those retiring before 6 April can top up using Class 3a NI, or could more profitably defer taking their pension and increase their pension by 10.4 per cent a year.
Of course it may not be worth plugging gaps if someone is likely to build up 35 years’ full NI anyway.
Added to this there is a state pension calculator on the website that is useless and potentially misleading because it does not take account of the new pension.
Many people are facing difficult and complex decisions over the coming months. They have a right to expect clear and accurate information from government websites. Instead what they are being told is muddled and misleading.
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And finally…
And so we come to the end of a year which saw people finally released from the straightjacket of annuities.
A year when financial advisers were left wondering whether they could give advice and then act against that advice without facing future retribution.
And a year when IFAs were one letter away from a world-shaking financial scandal – I am sure we will hear more of FIFA next year.
Merry Christmas and a happy new year.
Tony Hazell writes for the Daily Mail’s Money Mail section
