Let’s face it. Nobody is really interested in paying for insurance, until something goes wrong and they need to make a claim. When it comes to Insurance Backed Guarantees, installers don’t even get the benefit of the claim when something goes wrong with an installation, it’s for their customers, so why should they care? It’s just one of those things that they have to do as part for their Competent Person Scheme (CPS) membership. A necessary evil, as I’ve heard them called!
But, in home improvements, it only takes one story of a consumer being left high and dry on ‘Rogue Traders’ for all installers to be tarred with the same brush. In an industry where reviews are king and local installation businesses are built on reputation, that can have serious consequences for a company that finds itself associated with a murky scheme.
Whilst an Insurance Backed Guarantee may not give you, as an installer, any personal benefit, just think of what it means for your customer. I can confidently say that members of QANW install some of the best products on the market and have high standards of workmanship. They are confident in their work and their business, so why wouldn’t they offer an IBG to their customers? They have nothing to lose, but everything to gain.
Making sure that installers understand exactly what their protection offers their customers so that they have the confidence to talk about it when homeowners ask questions is really important.
But, the world of consumer protection isn’t always clear, especially if you start looking into the small print and disclaimers. Generally, we take what we are sold on face value. If you are working with a reputable, authorised insurance provider, who is dedicated to offering real protection, that’s probably ok. Unfortunately, there are other organisations using smoke and mirror tactics to sell ‘consumer protection’ that when it comes down to it, offer very little financial protection for homeowners or certainty for installers.
Know Your Policy
Long story short, the key thing to remember when you’re looking for protection for your customer is to make sure that you are dealing with a UK Authorised Insurer offering a genuine insurance policy. If your scheme just talks about ‘guarantees’ rather than ‘insurance’ they may not be insuring your risk with a bona fide policy in favour of your customer. It is always worth checking with your provider if this is the case.
Premiums from Insurance Backed Guarantees go into the pot to pay for claims made by consumers. Insurers have to demonstrate that they have sufficient funds to service claims over the period of the risks they underwrite. Financial services regulation generally prohibits unauthorised firms from underwriting these types of risk, so they are not regulated in the same way as authorised insurers. This means that it isn’t possible to tell how fees and premiums are used and crucially, whether funds will be available to honour guarantees when they’re needed the most - when the customer makes a claim.
These unregulated firms are also not obliged to make decisions on complaints in the same timely manner as insurers. Plus, if a consumer disagrees with a claims or complaint decision by an unauthorised firm, there may be limited options available.
Talking practically, let’s look at the potential outcomes for a consumer in a real-life situation, for example, if a provider decides not to pay a valid claim made by a homeowner.
An unregulated guarantee provider may have their own internal complaints process, where the customer may complain against the decision and seek to have it overturned. But there is no prescribed legal framework (governing timescales, etc) for such a process. This means they can take their own time on responses and results in consumers having to take the case to court, which can be a lengthy and costly process. The chance of the consumer getting the result they need will generally depend on how much money and time they have to fight the provider’s decision in a court of law (rather than the validity of their complaint). It’s situations like this which undermine the reputation of our industry in the minds of consumers.
Whereas, if the provider is a UK Authorised Insurer, they are bound by regulation and are legally required to provide a final decision on any complaint within prescribed time limits set by the regulator. If the customer disagrees with that decision, they have the right to refer the complaint for independent decision, free of charge, to the Financial Ombudsman Service (FOS). And the UK Authorised Insurer is legally bound by the FOS’s decision.
Confidence for Consumers
It comes down to the value of your reputation. Do you know what your financial protection actually offers your customers when you decide to retire, or start working with someone else? An IBG gives your customers complete confidence that their home improvement investment is properly protected. And that’s something you should be shouting about.
At QANW, it’s our mission change that ‘murky’ world of consumer protection into one that’s easy to understand and offers better protection for both consumers and our industry.