The Banque de France’s Financial Sector Advisory Committee (CCSF) now requires affinity insurance vendors who market, in particular, extended warranties or additional protection, to better protect consumers. This new decision complements the one taken before the summer, in particular to facilitate termination.
Affinity insurance sellers, including warranty extensions or additional protections in the context of the sale of a smartphone, for example, were already in the sights of the authorities for their lack of information. Before the summer, insurance professionals and consumer defense associations had reached an agreement, put in place by July 1, 2023 at the latest, to make termination easier after one year, and on the creation of an extended waiver period for affinity contracts.
The Banque de France’s Financial Sector Advisory Committee (CCSF) now goes further. In a notice published on Tuesday, it imposes with a new chance, fixed for January 1, 2024, with stricter constraints for this market which represents an annual turnover of 2 3 billion euros in France in 2020 according to the Federation of Affinity Guarantees and Insurance (FG2A). Faced with the warnings of insurance mediation, which is increasingly requested for disputes, it was decided unanimously to strengthen consumer protection by governing the collection of the insured’s consent and by ensuring its information.
See bad practices disappear
Indeed, it appeared that the consumer is not always aware of the subscription of an insurance contract during the purchase of a good, he does not necessarily know with which insurer he subscribed and the annual information that must be provided to it is often insufficient, or even in some cases, missing, insists the CCSF in its opinion delivered on Tuesday after three meetings between September and December 2022.
If the representatives of the insurers have reaffirmed the importance of these affinity insurance contracts which meet a real need, they also reiterated their wish to see the disappearance of any bad practices which would be the result of only a very small number of players. Here are the decisions adopted:
Collection of consent
- The pre-contractual documents and the draft contract must imperatively be given to the customer prior to obtaining consent.
- In the event of face-to-face subscription, the consumer’s agreement to the tacit renewal affinity insurance contract must be made by signature separate from the act of purchase of the good or service, either on paper or by electronic signature. specific and relating exclusively to the insurance document.
- In the event of taking out an affinity insurance contract online, the consumer’s agreement can be made by a positive act, clearly distinct from the act of purchasing the product or service. The part concerning the insurance contract is the subject of a separate page or a specific insert.
- The contract must be concluded with the insurer. The name of the contract insurer must appear clearly on the contract documents given to the insured.
- After signing the contract, a welcome letter is given to the insurer as soon as possible, on paper or by email.
What should the welcome letter contain?
This specifies the fact that the customer is engaged; the date of conclusion and effective date of the contract and the guarantees; the right of renunciation available to him, his deadline, his date of departure, his methods of exercise, in particular the service to be addressed and the option which the insured must have to withdraw from the contract by electronic mail; the contact details of the service or managing broker in charge of managing the contract and in particular the collection of premiums, with an indication of the amount of the deductions and the contact details of the complaints department as well as the contact details of the mediator.
When taking out an insurance contract online, policyholders also receive the welcome letter.
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The annual information of the insurer
- The insurer sends complete information to the insured each year. It includes the purpose of the insurance, the contract number, the wording of the debit, the total amount of the premiums for the coming year, information specifying that the insurance must be canceled by the insured in the event of loss or if the insured product or service is no longer applicable, and a reminder of the conditions for termination (termination at any time after the first year of subscription).
- The information is provided on any durable medium. If the annual information is provided in the customer area, the insured is notified by post, email or SMS.
The extension of contractual guarantees in the hard way
- The seller of the main good or service, who is also the distributor of the insurance contract extending the guarantees over time, must specify to the consumer that it is indeed an insurance contract and not a legal or commercial guarantee. It specifies the effective date of the contract and whether it is in addition to the legal or commercial guarantee.
- The insurer reminds by mail or email, two months before the effective date of the guarantee, of the existence of the insurance contract taken out by the consumer. It also recalls the conditions of termination. The information cannot be provided via the insured’s customer area.
Pay attention to the mode of remuneration of the sellers
The CCSF also reminds insurers that variable compensation systems for sellers of products and services must not distort the information and advice on the insurance product sold as ancillary. In particular, this variable remuneration must not be paid before the sale it remunerates.
The CCSF’s decision concerns all the affinity insurance contracts offered as an option to the customer who takes out non-professional purposes, when purchasing a good or service (travel insurance, insurance of nomadic products and insurance extension of warranties for everyday consumer products), excluding fixed term contracts which are paid as a single premium.