We would like to share with you an outline of the Product Approval Process that we use for new products as well as for significant modifications of existing products, and how we regularly review our established products. We would also like to provide you with a description of our Target Market, to clarify who our products are intended for, and how we monitor our distribution channels to ensure they remain appropriate, and do not have a detrimental impact.
Product Oversight and Governance
Isis Conveyancing Insurance Specialists (Isis) has well established product governance processes in place to oversee the design, approval and review of our products, which meet the requirements of the Insurance Distribution Directive, and the FCA’s guidelines covering product governance, pricing practices, product fair value, consumer duty and vulnerable customers guidance.
New product developments and significant modifications to existing products are subject to a formal product approval process that:
- Identifies the intended target market and the needs of those customers
- Tests the suitability of products to ensure they meet the needs of the target market
- Monitors post-sales performance and customer value
- Assesses fair value for the customer
- Ensures we will be able to deliver good outcomes for the customer, avoiding foreseeable harm (including to any vulnerable customers).
We also regularly monitor and review all of our products to identify if any changes are required, and to ensure that they continue to meet the policyholder’s needs and deliver good outcomes for all our customers. Along with extensive MI and root cause analysis reviews to support our ongoing monitoring, we undertake an annual ‘fair value’ product review to ensure our products continue to provide fair value to policyholders.
As product co-manufacturer, in conjunction with Liberty Mutual Insurance Europe SE (UK branch), Isis will continue to develop products suitable for our defined target market, and monitor the performance of our products as outlined above.
Please continue to direct any product development requests, feedback or concerns about Isis’ products via your usual contact.
Target Market and Product Distribution Statement
Our Legal Indemnity (LI) products provide contingency cover for title defects affecting UK property. The policies are designed for property buyers and/or lenders who require insurance protection against future claims arising from one or more defects affecting a property’s title, which are revealed during the conveyancing checks undertaken, prior to completion of a purchase and/or mortgage.
The policy can cover private consumers, small and medium enterprises (‘SMEs’) or large companies, including lenders. All being a client of the conveyancing solicitor or licensed conveyancer who identifies the title defect and decides to arrange a LI policy to protect their client and/or lender from future claims, rather than attempt to legally rectify the defect. A single premium is paid for the policy, which often runs indefinitely, starting from the date of the client’s purchase/mortgage.
As well as providing the financial protection required, the products enable the transaction to proceed as an affordable alternative to attempting to legally resolve the title defect, which can be time consuming and uncertain, and potentially prevent a transaction from going ahead as planned (including a lender refusing to provide a mortgage). It also ensures the property is marketable in the future, by often automatically protecting subsequent owners of the property (and any lenders).
FCA regulations prohibit us selling these products directly to an insured, so we deal with the law firm acting on their behalf, who are regulated by either the Solicitors Regulatory Authority (SRA) or Council of Licensed Conveyancers (CLC). These legally qualified professionals represent a very established distribution channel, whose own regulations require them to act in the best interests of their client.
As such, if a law firm charges their client a fee for arranging one of our LI products, we expect the cost to reflect their professional time in doing so (including checking the policy meets its client’s ‘demands and needs’) and is in reasonable proportion to the policy premium quoted by us. The SRA/CLC’s rules also mean that any such fee is disclosed to the client in advance, and this forms part of the total, overall conveyancing costs charged for acting on their client’s property transaction.
Our standard procedure is not to remunerate law firms for arranging LI products with us, but if they were to retain commission, this is subject to their own client disclosure rules. Consequently, their client should be aware of any such remuneration, in relation to the LI policy arranged on their behalf.
We generally review this distribution channel as part of our annual ‘fair value’ product review to ensure it remains appropriate, albeit bearing in mind the established role of conveyancing firms, arranging LI policies as ancillary to their primary conveyancing work for their client and lender. This role is also reflected by their status as an exempt professional firm under FCA regulations.
Our Missing Will and Missing Beneficiary (MBI) products provide contingency cover on UK probate cases. The policies are designed for executors or administrators of a deceased’s estate who require insurance protection against future claims arising from beneficiaries who are either missing or unknown at the time of distribution of the estate. Cover is normally required when:
- The deceased made a Will (or may have done) naming beneficiaries, but it cannot be traced, or there is only an unsigned copy available. Likewise, the family may suspect the deceased up-dated their original Will, but they cannot trace the latest version
- An estate is being distributed in accordance with the terms of the deceased’s Will, but there is one or more named beneficiaries who cannot be traced
The deceased died without making a Will so the estate is being distributed to the traced family beneficiaries under the rules of intestacy, but:
- one or more known beneficiaries cannot be traced; and/or
- there is a possibility that other family beneficiaries exist, who are unknown
- there is a risk the deceased made a Will, naming other unknown beneficiaries.
As well as providing the financial protection required, our MBI products enable the assets of an estate to be distributed to the known beneficiaries after sufficient research has been carried out, and for distribution to be concluded fully, without any amounts having to be retained indefinitely to allow for future claims.
FCA regulations prohibit us selling these products directly to the personal representatives in their personal capacity, so we deal with either:
- the probate lawyer acting on behalf of their behalf, who are legally qualified professionals regulated by the Solicitors Regulatory Authority (SRA), whose rules require them to act in their client’s best interests
- a genealogist firm who has undertaken the family research required and is assisting with the estate distribution, or an insurance broker, both of which will be authorised separately by the FCA and subject to the insurance distribution rules.
If any such firms charge their client a fee for arranging one of our MBI products, we expect the cost to reflect their professional time in doing so (including checking the policy meets its client’s ‘demands and needs’) and is in reasonable proportion to the policy premium quoted by us. Regulatory rules also mean that any such fee is disclosed to the client in advance, and this forms part of the total, overall costs charged for distributing the deceased’s estate.
Our standard procedure is not to remunerate probate law firms for arranging MBI products with us, but if they were to retain commission, this is subject to their own client disclosure rules. The same applies where we pay commission to a genealogist firm or insurance broker, who are subject to the equivalent FCA rules. Consequently, their clients should be aware of any such remuneration, in relation to the LI policy arranged on their behalf.
We generally review this distribution channel as part of our annual ‘fair value’ product review to ensure it remains appropriate, albeit bearing in mind the established role of all firms referred to in 1 and 2 above, with the arranging of an MBI policy being ancillary to the primary roles of the probate lawyer and genealogist distributing the estate. This role is also reflected by the probate law firms’ exempt professional firm status under FCA regulations