FMA releases updated guidance on customer vulnerability

FMA releases updated guidance on customer vulnerability | Insurance Business New Zealand

FMA releases updated guidance on customer vulnerability

The FMA has updated its guidance on how insurers should treat customers facing vulnerability, and has highlighted the importance of having “business-appropriate support systems for customers in vulnerable circumstances.”

The guidance defines vulnerability as someone who is “especially susceptible to detriment” due to personal circumstances, particularly when a firm is “not acting with appropriate levels of care.”

It also covers good practice when developing policies and procedures, ensuring staff are well trained to identify and assess vulnerability, and the need for good customer service and communication.

Read more: Examining customer vulnerability in insurance

“There is no ‘one size fits all’ approach to developing and embedding processes and practices related to customer vulnerability,” the FMA said. “However, a firm’s responses should reflect its scale, size and complexity, and consider the likelihood of its customers experiencing vulnerability.”

“COVID-19 has resulted in customer-facing staff and intermediaries encountering changing and more complex examples of customer vulnerability,” it said.

“Firms should consider having specialist support available for vulnerable customers either internally, or externally through charities or third-party providers. This support works most effectively when it is promoted and accessible.”

MAS independent director Suzanne Wolton has encouraged the insurance industry in particular to work closely with the regulators on issues of vulnerability, and she said this will boost both customer wellbeing, and the public image of insurance.

Read more: Sedgewick offers vulnerability-focused training to staff

“I think that some of the networks we have in our industry can be a bit focused on transactional things, and while this is absolutely fine, that’s not the thing that’s going to make a difference to our industry in terms of how the public perceives us,” Wolton said.

“Empathy is the thing that’s going to make that difference.”

“We’ve all seen the things that the FMA has been releasing around the reviews it’s done, the questions it’s asked insurers and the responses it got,” she explained.

“What’s inherent there is that there are some things that the industry is doing well, but relatively few responders addressed the issue of vulnerable customers. So, we do need to be working with our regulators, and we need to keep that up across all areas of insurance - fire and general, life, etc.

“The more we can collaborate, the better we will be at addressing this.”