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IC says insurers selling products online must be transparent about terms, responsive to clients

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Insurance Commission (IC)
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THE INSURANCE Commission (IC) has ordered health maintenance organizations (HMO) and pre-need companies to be more transparent with their products and terms when they offer these online.

Insurance Commissioner Dennis B. Funa issued several circulars laying out guidelines that HMOs and pre-need firms need to follow as they use digital platforms in selling their products and services.

The regulator stated in one of the circulars that “consumer confidence in electronic commerce is enhanced by the continued development of transparent and effective consumer protection mechanisms that limit the occurrence of fraudulent, misleading or unfair commercial conduct online.”

The IC said distributing and selling products digitally would also increase penetration rate and reduce costs for businesses.

The coronavirus pandemic has forced industries, including those in the insurance business, to use digital platforms and e-commerce to boost sales and expand their reach while mobility restrictions are still in place.

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Based on the guidelines, HMOs and pre-need firms offering their products and services online should be transparent with their customers while providing effective consumer protection.

Basic information about the companies such as location and owners should be easily accessed by customers, and communication between the seller and buyer should be readily available as well.

The firms also have to provide sufficient details about the products and services offered, the terms, conditions and costs to help customers make an informed decision on whether or not to buy them.

User-friendly and secured payment options should also be available on e-commerce sites, while the full price indicated should be clear, such as if these are inclusive of delivery fees, taxes and other applicable charges, the IC said.

“Consumers shall be provided with a meaningful opportunity to correct or cancel the transaction or application before it is accepted and processed,” it added.

HMOs and pre-need firms are required to give clients an electronic copy of their completed application, agreement or contract, endorsement and certificate of insurance coverage, if applicable, right after the transaction is done.

If the transaction will later on be proved voidable, the companies should refund clients’ payments.

“Intermediaries (or general agents who have a website for e-commerce of HMO and pre-need) products are not allowed to approve policies or endorsements or issue such electronic documents through their website,” the regulator said.

However, the IC noted they will allow platforms owned or controlled by HMO and pre-need companies, as well as those that they partnered with, to approve policies or issue necessary documents.

Partners can be online sales portals, website links, mobile applications and online sales platforms used for e-commerce.

Meanwhile, the IC also recognized that HMOs and pre-need firms can use financial technology (fintech) to develop further their products and services, allowing any small-scale and live testing of technological innovations within a “regulatory sandbox,” after obtaining approval from the regulator.

The regulator requires successful applicants to submit a monthly report to the IC about the progress and concerns on the ongoing live testing.

“Technological innovations have been a key driver of change in the financial sector, leading to the advent of fintech,” the regulator said in a separate circular.

“This Commission recognizes the immense benefit that can be derived from further developing fintech innovations through experimentation, testing, and learning, which can be achieved compromising the protection of the interests of the insured public,” it added. — Beatrice M. Laforga

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