The Polish Insurance Association and the Polish Banks Association (ZBP) announced the third recommendation of good practice for the bancassurance market. The document concerns the so-called investment or savings insurance. It will enter into force on 1 January 2013. Simultaneously, the first recommendation of good practice was updated in respect of protective insurance linked to banking products. The purpose of both documents is to improve standards in the bancassurance market and comply with guidelines of the Polish Financial Supervision Authority.
Works on the draft “Third recommendation of good practice on the Polish bancassurance market in respect of insurance with an investment or savings component” were conducted for more than a dozen months by teams of experts appointed in the ZBP and the PIU. The draft document was also the subject of detailed consultations with the Polish Financial Supervision Authority, the Office of Competition and Consumer Protection, the Ministry of Finance and the Insurance Ombudsman. The central part of the recommendation is to define disclosure obligations of the bank against the customer by specifying the minimum scope of information that should be communicated to the consumer before providing the insurance coverage to the consumer. This applies in particular to documents relating to the conclusion of the insurance contract and terms of insurance which should include, among other things, the information on: costs incurred by the customer and the method of their calculation, principles of determining the amount of benefits due to the consumer and the possibility of the occurrence of the risk associated with a particular investment. The customer should also receive clear information whether the bank acts in the capacity of the insurer or an intermediary.
“The Third Recommendation requires that documents delivered to the customer be written in a transparent and clear manner that does not raise doubts in readers, and that all ambiguous expressions be interpreted in favour of the customer. Taking into account the experience of the financial sector with the implementation of MIFID, the document also includes some provisions concerning a verification of conditions for providing the insurance cover to the customer. Banks undertook, among other things, to check whether the customer meets the requirements for being covered by the protection, provided for in the conditions of insurance (in particular the age). In addition, if the customer exercises the right to opt out of insurance cover, banks have an obligation to inform the customer of all consequences of opting out, including any related costs. The principle that information materials on insurance should contain the information on the application by banks of the provisions of the Recommendation was also considered to be a desired market standard.” – explains Małgorzata Knut, chairwoman of the PIU Bancassurance Team.
The First Recommendation of the PIU and ZBP on protective insurance linked to banking products was updated with the solutions used in the Third Recommendation. The changes introduced in that Recommendation constitute also a response to the demands of the PFSA and the current changes in the market. The new document was supplemented with, among other things, a new paragraph specifying the principles of bank’s conduct when the insurance constitutes collateral for a loan and the relationship between the bank and the customer if the bank considers it unjustified to further assert a claim from the insurer (an agreement on a transfer of claims with the beneficiary or a heir).
“The recommendations prepared jointly by the banking and insurance environment concern a substantial part of the insurance market. As shown by the results of the bancassurance market after the second quarter of 2012 collected by the PIU, the amount of gross premium written acquired in this channel is PLN 11.2 billion for life insurance and PLN 690 million for non-life insurance” – says Jan Grzegorz Prądzyński, president of the management board of the PIU.
This represents 57.5% of the premium on the life bancassurance market and 6.7% on the non-life bancassurance market. Investment products constitute as much as 88% of the premium acquired in the bancassurance channel by insurance companies. Non-life insurance is still dominated by products related to loans – financial insurance and real estate insurance.
At the end of September 2012 TNS conducted a survey on bancassurance commissioned by the Polish Banks Association. The survey was conducted in two hundred bank branches around the country which represent all types of domestic banks. The survey shows that a vast majority of bankers (87%) sees a potential in combining banking and insurance services. What is important, a vast majority of respondents (66%) is of the opinion that the services of this type are added value for customers of their bank. The survey also shows that similarly to the previous year, a majority of customers chooses to additionally insure mortgage loans (77%) and consumer loans (73%) and nearly half (46%) obtains insurance for payment cards. In case of insurance of consumer loans and payment cards, the customer interest in those services increased over the last year – by 7 % for consumer loans and 4 % for payment cards.
“The data on the development of consumer loan and payment card insurance show an increase in customer interest in those services by several percent. This may mean that in such difficult times the Poles awareness concerning the possibilities of securing banking products used by them is raising” – says Krzysztof Pietraszkiewicz, president of the Polish Banks Association.
After the entry into force of the Third Recommendation, the Polish Banks Association intends to monitor its implementation and universal application and inform about the progress in its implementation by additional banks and insurance companies. The ZBP hopes that the Good Bancassurance Practice will become a universally applicable standard for insurance related with banking products and will ensure a high quality of services provided by banks.