The Insurance Ombudsman believes policyholders should be given time tocheck prices before their policies are due for renewal, writes Laura Slattery
Insurance companies are not giving policyholders enough notice of changes in the terms of their policies, according to the Insurance Ombudsman, Ms Caroline Gill. As a result, customers do not have enough time before the renewal date to shop around for cover.
The ombudsman has recommended that insurance companies which leave it to the renewal date to notify customers of changes to their policies should alert policyholders by placing a warning next to the renewal premium figure.
In her annual report, Ms Gill said the majority of policyholders only look at how much insurance premiums will cost them if they renew their policies, without looking at any accompanying documents outlining changes in the terms of the cover.
"I would recommend that near the renewal premium figure quoted it should state 'N.B. Policy Change - see attached important notice for details' or some similar wording drawing attention to the change," according to the report.
"Some companies are doing it, but we'd like to see them all doing it," she added. If policy changes are flagged clearly and preferably in advance of the renewal notice, this should cut down on the number of disputes, Ms Gill said.
However, the insurance ombudsman scheme is a voluntary scheme funded by industry, not a statutory scheme. Implementing the recommendations in Ms Gill's annual report is "a matter for the Government".
The representative body for the insurance industry, the Irish Insurance Federation (IIF), said it would look at the ombudsman's report and address its recommendations.
"Obviously it is only fair to bring it to the policyholder's attention that the terms are being changed," said Mr Michael Horan, non-life manager at the IIF.
"As to how it's actually done, that's a matter for individual insurance companies. The main issue is that it's clear, not buried away in some microscopic print somewhere."
Mr Horan said renewal agreements were subject to the normal principles of contract law: both sides need to know exactly what the contract entails. "Our advice always would be to read the documentation you are getting and also to shop around, either by yourself or through a broker," he said.
Business owners have objected to last-minute notice of expiration dates for employers and public liability insurance. This gives small firms little choice but to renew their insurance with the same company if they want continuous cover.
According to the Irish Small and Medium Enterprises Association (ISME), delaying notification of insurance quotes is a tactic used by the industry to restrict the time that businesses can shop around and effectively prevents them from receiving the best quote available.
Meanwhile, a recommendation made by the Motor Insurance Advisory Board last year has already come into law. It states that insurers must give motor insurance policyholders 15 working days' notice in writing of the renewal of the policy and the terms of the renewal. The regulation was brought in to give consumers sufficient time to search for the most competitive quote.
Mr Horan of the IIF said insurers were under no obligation to issue renewal notices for other types of insurance, but that they usually do so about two weeks before cover expires. "If you want to go through a shopping-around exercise, you can do so at that stage," he said.
He added that the IIF was in discussion with business organisations about some of the insurance difficulties faced by small businesses.
