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Insurers and wet signatures

Just last month I read that someone has launched a campaign for wet signatures for electronically submitted protection business.

I guess, like me, your first instinct may be that there are surely more important things we could spend our time campaigning for or against.

However before you dismiss the idea one way or the other, it is worth understanding some of the detail of what it is that providers do and do not want when it comes to wet ones and the possible outcome for customers.

As soon as you start to populate a table with insurers’ requirements, their very different procedures soon become clear – the following obser-vations are based on the nine most commonly used insurers we work with.

All nine of the companies send to the customer a copy of the questions posed and the answers provided. Four of them insist on a copy being signed (wet signature) and returned to them at some point/ However, all four of them will allow the policy to be placed on risk before receiving it.

Of the four that require the documentation returned, one never follows up the initial request if it is not returned, one does once – after 14 days, one chases during the second and fourth week and one chases on the 7th ,14th , 28th , 35th, 42nd and 53rd day.

All the companies have the same solution to not hearing back from a customer they have written to, which is to write to them, genius or what.

There is one exception and that is the last company mentioned above, where, on the 53rd day, they actually try to call the customer – let us hope they have a mobile or have not moved, which around a third will have done, of course.

All four of them cancel policies if they have not received the customers’ wet signature within their time limit (which also varies from 30 to 84 days).

So have the insurers made up these arrangements all by themselves or is this an example of insurer’s procedures being dictated to them by reinsurers?

The answer is that reinsurers are pretty relaxed on the issue. They say that their terms/requirements reflect the individual insurer’s approach to managing non-disclosure “in the round” and, within that, they do not specifically target wet signatures. However, if all other things were equal, at least one would offer better terms for wet signatures.

The legal position seems clear in that wet signatures are not required.

The Financial Ombudsman Service will, of course, judge each case on its merits, which means they get to make it up as they go along, which is always a bit of a worry for people trying to manage risk.

If you talk to advisers, they say that wet signatures represent the belt and braces approach, however, they also recognise that insurers are imperfect organisations (believe it or not) and they do not really trust insurers to always do the job properly.

When quizzed further, they do accept that the processes that some insurers follow can and would lead to some customers losing cover without realising it.

My own company’s experience is that insurers occasionally do silly things (for example, writing to the wrong address) and do so in enough cases for us to believe they do not really have their own processes nailed down.

So when it comes down to customer outcomes, I think I have more confidence in customers answering questions properly and fully (when they are posed at the right time and by appropriately trained individuals) than I do in them understanding insurers’ sometimes confusing post-issue requirements. Especially after they have already been told that their cover is in place.

Finally, let us also not lose sight of the fact that most advisers sell only a few policies each month using a range of insurers – each with very different practices – all of which reads like a recipe for failure and probably worth campaigning against, if campaigns are your thing.

Richard Verdin is sales & marketing director of Direct Life & PensionsRICHARD VERDIN

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