On 4 December 2015, EIOPA published a Report on Consumer Protection Issues arising from the sale of Mobile Phone Insurance (MPI). The EU wide survey follows the discovery of a number of issues with the sale of MPI including high premiums, high commissions, large exclusions, long duration contracts and burdensome claims-handling processes. Country specific thematic investigations into the MPI sector also reveal that consumers are receiving insufficient information on the terms of their contract and claims/complaints processes.
The Report identifies a disparity between consumer perception of the protection they are receiving under MPI products and the protection they are actually receiving. For example, 50% of MPI products contain theft related exclusions. The Report recommends the use of plain language and adding simple and straightforward explanations of essential product features to manage consumer expectations.
Other recommendations made in the Report include improvements to the sales process of MPI products. Consumers should be adequately informed of the duration of their contract and of their cancellation rights. The need for greater transparency in the claims administration process was also highlighted.
The Report notes that many of the recommendations will be covered by the Insurance Distribution Directive (IDD), which replaces the EU Insurance Mediation Directive (2002/92/EC). The IDD introduces new enhanced regulatory standards for insurance sales in the broader context and will be transposed into national law in the next two years.
A link to the Report is here.