POR ASF issued Circular 3/2023 on recommendations re information to be provided to by insurers to consumers and policyholders on changes to insurance premiums.
Context
POR ASF has received several complaints within the scope of various policies and lines of insurance, in which provision of information re alteration of contractual conditions is not appropriate, namely regarding the increase of insurance premium.
Situation that sometimes arises from updates or rules defined in contract that are also not adequately communicated or clarified to consumer at time of contract conclusion.
Thus, per supervisory experience in promotion of transparency and accuracy of the information provided to policyholders issued circular 3/2023 with recommendations.
Disclosing to the market set of good practice recommendations applicable to insurance premium payment notices, other aspects related to possible contractual amendments.
Recommendations
It is essential for consumers to be informed of relevant aspects of contract conditions on variations in insurance premiums in policy term period so can make good decisions.
Recommendations benefit good functioning of the market, protect consumers rights.
It is recommended that, on anniversary or contract renewal date, insurers include in payment notices, in addition to premium for following period, note on previous annuity premium, or previous ones, so it is possible for policyholder to make a comparison.
Insurers should prominently include in payment notices indication of impact on change of premium applicable to contract, of variation of loss ratio, variation of insured capital.
Plus variation of contracted coverages, quantifying in %, each factor separately.
Also indication of impact, on variation of premium applicable to contract, of other factors that are relevant, quantifying, in percentage, each of them separately.
Plus identification of other factors that may be relevant in variation of the premium.
Payment notices should include indication policyholder has right to request information on specific remuneration insurance intermediary receives for the distribution service.
When possible, automatic changes arising from normal validity of contract must be reflected in clauses, clearly indicating conditions in contractual terms, if it is foreseen to change premium during contract, at what times, under which conditions this occurs.
Also how premium is calculated, factors that may cause an increase in amount payable like change in age group in health insurance or the verification of a high loss ratio.
Other Aspects
Circular includes also rules on their implementation and monitoring of compliance, etc.
Jan. 2024 New Circular
On Jan. 8, 2024, POR ASF issued Circular 1/2024 of Jan. 4 instructions on application of cir 3/2023 on information to provide by insurers if insurance premiums changed.
Per information obtained regarding the implementation of good practices indicated in that circular, POR ASF recommends the phasing of the necessary actions by insurers.
Allows them to ensure consistent, prioritized action based on indispensable measures.
Categories of insurance contracts identified in which, due to their impact and scope, application of recommendations regarding payment notices issued should be a priority.
Transitional period until Dec. 31, 2024 for some contracts: individual health insurance.
Also for insurance contracts in Motor and Fire and Other Damage group, in which the policyholder is a consumer or a sole trader.
The set of factors to be considered for purposes of justifying variation in premium during the mentioned transitional period, was also circumscribed.
On Jan. 1, 2025, application of recommendations in cir 3/2023 come into full force.
POR ASF will continue to monitor and evaluate the measures implemented by insurers, issuing guidelines to safeguard the principles reflected in the cited circular 3/2023.
