From Monday – Duty to disclose in the process of joining a client that most of the agent’s income is from certain insurance companies
From this coming Monday, March 1, insurance agents are required to find out, as part of Customer attachment, If they work with one company mainly – that the total commissions from it amount to more than 40% of the commissions it receives in the same industry.
This is the entry into force of the amendment to the “Joint Circular” published by Commissioner Moshe Barkat last December; It was due to take effect on January 1 and was postponed to March 1 to allow agents and companies to get organized.
This is a significant move to promote the objective agent model initiated by the Commissioner, which has been criticized by many agents and by the Chamber of Insurance Agents. According to the amendment, the insurance agent will be required to “disclose to insurance applicants during the joining process that most of the insurance agent’s income is from certain insurance companies and he offers the insured the products from these companies only, and not from all existing products in the insurance market.” The directive will not be valid for group insurance.
According to the Authority, these provisions are required in light of a data analysis conducted by the Insurance Capital Market and Savings Authority, which showed that “about 85% of insurance agents work with a maximum of two insurance companies and about 60% work with only one insurance company. These data illustrate the lack of practice. “Existing in the fact that an insurance agent offers the applicant for insurance a limited supply of insurance products, in contrast to the common opinion that most insurance agents offer policyholders the products that suit them from all the companies and products available in the market.”
Prohibition on attachment during the insurance period
The circular also prohibits the stipulation of the procedure for joining the insurance and the procedure for adjusting the needs so that the insurance applicant remains insured for a fixed or non-fixed insurance period. “Following public inquiries received by the Authority, it emerged that insurance agents attach insureds to various insurances, requiring them to remain insured for a certain insurance period. Insureds who sought to cancel the policy during the insurance period were required to pay a cancellation fee for the policy. “At the time of joining the policy, stipulating the procedure for joining the insurance, including the procedure for adjusting the needs of the insurance applicant, constitutes a competitive barrier that impairs the insured’s ability to move to other policies that will better serve his needs.”
The circular also requires an insurance marketer to “present to the insurance applicant the results of the needs adjustment procedure he conducted for him including comparing the insurance premium between different policies, the difference in policy terms or the difference in service to be provided to the insured when purchasing one policy over another and for any other reason.” Even in the process of changing policies, an insurance company or insurance agent will be required to present to the insurance applicant all the reasons for which the insured was recommended to change policy. “
The industry estimates that agents who today only worked with one or two companies will work with more companies. Proponents of the move suggest that it will lead to greater transparency, more credibility of agents and more appreciation of customers towards them. They also believe that it will actually increase the power of agents vis-à-vis companies that will want to attract agents to work with.
More on the subject: Shlomo Isaac, takes command and tries to stop the entry into force of the “Joint Circulation” – Contact the Spokesman