The basic standard for performance of transactions establishes the requirements for the insurance contract registration procedure (including determination of the consumer’s property interest), insurance premium payment, damage compensation, the insurance payment terms and procedures, protection of information received by the insurer, and terms of cooperation between insurance organizations and insurance agents.
Among other things, the document regulates:
- Insurer’s obligation to inform the insured about delay in payment of insurance premium or the fact of its payment not in full, as well as the consequences of such violations in the manner agreed with the insured when concluding the insurance contract;
- A clause on the insurance organization’s liability for improper organization and late payment of damage compensation, as well as possibility of objecting to quality of work (if the insurance organization chose the repair contractor);
- A clause that in case of loss of documents for insurance payment, the insurer, with certain exceptions, is not entitled to repeatedly demand their provision from the person submitting the application;
- An obligation to establish the requirements for the level of education and training of insurance agents (employees of an insurance agent, a legal entity that interacts with policyholders), and provide a relevant instruction (training).
The basic standard of protecting the rights and interests of insurance organization consumers (both individuals and legal entities) establishes important requirements for the contract of investment life insurance (ILI) conclusion procedures between the client and the insurer. In particular, the insurance organization is to provide the financial service consumer with additional information on the ILI agreement features, risks associated with such an agreement, no income warranty under the contract and the procedure for calculating the redemption amount. During the cooling period, when the client has the right to decline the services and receive his money back, the insurance organization must contact him and receive confirmation that he understands the insurance contract terms (including the limitations associated with the early termination of the insurance contract). These requirements of the standard will apply to insurance organization agents offering consumers the appropriate insurance product, including the sale of insurance products through credit institutions.
Provision of information with customer is one of the key components of the consumer protection standard in insurance. The standard also suggests that legality, credibility, conscientiousness and completeness of information reported should be the main principles for the provision of advertising information that is distributed by insurance organizations so as not to abuse the trust or insufficient financial literacy of consumers.
Both basic standards will be compulsory after 270 days from the date of their uploading on the official website of Bank of Russia. Insurance organizations are obliged to bring their activities in compliance with the standards within this period, in particular: to ensure the proper functioning of the official site, organize office work, approve internal documents regulating the procedure for storing information, training employees, appeal analysis, and also include a provision in agency agreements, that obliges the insurance agent to comply with the requirements of the standards.
The provisions of basic standards apply to the relationships between insurance organizations and recipients of insurance services arising from insurance contracts concluded before the date of the standards’ introduction in a part that does not contradict the terms of the above mentioned contracts.
The application of basic standards will help improve the quality of financial services of insurance organizations and increase the transparency of their activities.
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