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Tele-Selling

Where an insurer concludes or renews a contract of insurance by means of a telephone communication with the insured, the insurer's employee or agent must make oral disclosure at the time of the communication. This requires a statement that, for example:

• "ABC Insurance Co [Insurer] has a XYZ rating [Rating and Description] which was given on Date/Month/Year" [Date]; or
• "ABC Insurance Co [Insurer] has elected not to have rating in accordance with the Insurance Companies (Ratings and Inspection) Act 1994, and is not required to have a rating".

This oral disclosure must then be followed up by written disclosure as soon as practicable. Written disclosure can be effected by:

• The delivery of a disclosure document to the insured, which sets out the following matters:
  • The insurer's current rating and the date on which the rating was given; and
  • The rating scale of which the insurer's rating forms part; and
  • Any credit watch warning relating to the insurer's rating, the date on which it was given and the reasons for it; or
  • That the insurer has elected not to be rated and is not required to have a rating.
• The incorporation of the above matters in writing in the invoice, insurance contract or confirmation of insurance delivered to the insured.

Direct Selling

Where an insurer concludes or renews a contract of insurance other than by means of a telephone communication or an insurance intermediary, the insurer should make written disclosure before the contract is entered into or renewed. Written disclosure can be effected by:

• Presentation of a disclosure document to the insured;
• Incorporation of the disclosure information in the insurance proposal;
• In the case of the delivery of a renewal or expiry notice to the insured, incorporation of the disclosure information in the notice or attachment of a disclosure statement to the notice.

Insurance Effected Through Intermediaries

The Act provides that disclosure by an insurance intermediary who arranges or renews a contract of insurance is sufficient and that the insurer is not then required to make direct disclosure. However, the obligation to make disclosure remains with the insurer. If the intermediary fails to make disclosure, the insured is entitled to cancel the contract of insurance within 20 working days.

There are two steps an insurer may take to assist an intermediary to comply with the disclosure requirements of the Act.

1. Ensure that intermediaries who place business with the insurer are equipped with the information to make written disclosure. This may involve providing those intermediaries with a disclosure document which contains all the information required to be disclosed.
2. Include the disclosure document with the insurance contract or confirmation document, where this is delivered by the insurer to the insured.