Towards better consumer protection in affinity insurance

Second layer on affinity insurance. The Financial Sector Advisory Committee (CCSF), a consultation body that proposes measures to improve relations between financial institutions and their customers, unanimously adopted an opinion to “better inform and better protect” customers. Distributors of affinity insurance, insurance contracts taken out in addition to the purchase of a good or service or as an extension of guarantees, are under fire from criticism from the supervisor (ACPR) and consumer associations for the lack of clarity on the terms of the contracts and their aggressive business practices.

As early as autumn 2022, the CCSF had launched work on informing policyholders after noting that “some of these contracts were taken out without the policyholder being sufficiently informed”. After three meetings, the members of the CCSF adopted several measures that affinity insurance sellers will have to take by January 1, 2024 at the latest with regard to the collection of consent, annual information, the extension of contractual guarantees in the duration and distribution.

In addition to the reminder of good practices required by law, the CCSF explains that “the name of the insurer of the contract must appear clearly on the contractual documents given to the insured”. A vagueness can indeed exist during the purchase of a good or a service between the contract linked to this purchase and the contract linked to an insurance product provided by an insurance company. A welcome letter, specifying in particular the customer’s commitment, the dates of the contract and guarantees or even the coordination of the claims department, must be given to the insured after the signature of the contract, including for subscriptions by internet. Full information to the insured must, more generally, be sent each year.

Concerning the extension of contractual guarantees, over time, the seller, who distributes the insurance contract bearing this extension, “must specify to the consumer that it is indeed an insurance contract and not a legal or commercial guarantee” and the insurer must remind, by mail or email “two months before the guarantee takes effect, of the existence of the insurance contract taken out by the consumer” and the conditions of termination.

Waiver period

The CCSF also tackled the method of remunerating sellers. After having “noted that certain forms of financial incentives granted to the employees of insurance intermediaries on an ancillary basis, can be a source of aggressive commercial practices”, the opinion explains that “the systems of variable remuneration of sellers of products and services at main title must not distort the information and advice on the product sold as an accessory”.

This opinion comes a few months after a first decision on the subject of affinity insurance in April. In particular, the CCSF has extended, from January 2023, the waiver period provided for in the Hamon law from 14 days to 30 days in the context of the subscription of affinity contracts. The body also intends to continue its work on vendor compensation systems. “The Committee will resume its work on the method of remuneration and training of these sellers, at the end of 2023, after the completion of the work of the European Commission”, he explains in a press release.

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