A NEW Act on Insurance Mediation should cleanse the Slovak insurance market of "insurance advisers" who tend to forget about their clients right after signing an insurance policy. Typically, these insurance agents and brokers are not available if a client wants to change the policy or get additional advice. The Insurance Mediation Act came into force on September 1, 2005.
The Act should be a win-win situation for clients and insurance companies. Clients should benefit from the new Act through better advice, because it stipulates that agents and brokers must have certain qualifications and provide a specific level of service.
However, the Act also means that insurance companies will increase its number of satisfied customers, so fewer clients will cancel their policies after the first year or so.
"The Act on Insurance Mediation should bring clients a higher quality of consultancy. Currently, insurance mediation should not be just about signing policies but also about serving clients. It should be about helping clients to make changes to the insurance policy or in case the insured accident actually happens," Róbert Vitkovský, product manager of Salve Group SK, told The Slovak Spectator.
Previously, almost everyone who signed an employment contract with an insurance company could become an insurance broker or an agent. The new law defines who can work as an insurance agent or broker. The law requires a secondary school graduation and no criminal record as minimum qualifications to be able to sell insurance.
All the insurance agents will have to be listed by the end of this year in a special registry at the Financial Market Office.
An insurance agent or a broker is obliged to write a memo after meeting a client in which he records all the client's demands connected to the insurance. The client then signs the memo. "This record can be used in the future as proof for a client's insurance claims," Vitkovský said.
He continued: "Current problematic cases usually do not end in favour of clients. The argument is that a client signed the terms of a policy and by doing this he agreed to them. The [insurance companies] approach is - so why is he complaining now?"
Vitkovský thinks it is in the interest of a client but also an agent or a broker to put down every client's demand before signing an insurance policy.
According to Vitkovský, an intermediary should ideally spend several hours with a client explaining him the terms of contract. But in reality a client often receives just a summary of basic points.
Vitkovský acknowledged that it is often not possible to spend a lot of time with a client but added: "I really consider taking care of clients as crucial. The life situation of a client could change significantly so the policy must be adjusted accordingly ."
The new law takes in the possibility that a client may have received bad insurance advice by making it obligatory for agents and brokers to have insurance against giving bad advice.
Vitkovský is confident that the new legislation will not only raise the quality of the insurance industry but will make brokers and agents more competitive.
"The obligations which the new law introduces will maybe weed out those agents and brokers who do a bad job. I suppose only those who take their clients seriously will stay," he said.
He emphasized that insurance agents and brokers were supposed to look after clients even according to the previous legislation but often it was not happening. It is a high time the new act was adopted. Insurance is a long-term product, it very often lasts for tens of years. But only the future will show if the quality of Slovak insurance advice really improves.
24. Oct 2005 at 0:00 | Marta Ďurianová