As a part of its oversight of marketing law, the Swedish Consumer Agency has directed criticism at several insurance companies that have set specific time limits and formal requirements for consumers who want to cancel their insurance policies.
The Swedish Consumer Agency oversees companies' marketing and contractual terms in relation to consumers. Within the framework of the Swedish Consumer Agency's supervisory work, it checks that companies' marketing and contractual terms are not misleading or improper in any other way. Insurance companies that offer insurance policies to consumers are consequently covered by both the insurance contract rules and the general consumer protection rules that apply to marketing and contractual terms. According to the Swedish Insurance Contracts Act (2005:104) (”FAL”), consumers are entitled to cancel their insurance policies at any time for termination at the end of the insurance period. Based on both the preparatory materials and case law, it is also clear that consumers are entitled to cancel their policies both verbally and in writing, and that contractual terms that set specific formal requirements for cancellation on the part of the consumer are, as a principal rule, unreasonable.
The Swedish Consumer Agency has now directed criticism at three insurance companies' cancellation terms. The criticism applies in part to the setting of specific time limits for cancellation on the part of the consumer, in part that requirements have been set on submission of insurance number when exercising the right of cancellation according to the Distance Contracts and Off-Premises Contracts Act (2005:59) (”DAL”), which constitutes an unauthorised formal requirement. It is important to note that the Consumer Agency's criticism does not only relate to conditions in insurance agreements. On the contrary, the Consumer Agency believes that it can also concern unauthorised cancellation terms according to FAL when there are no time limits in the contractual terms, but that are set in the communication with the customer when an attempt is made to cancel an insurance policy. The Consumer Agency has namely not been able to find that certain of the cancellation terms are set out in the policy conditions. It can therefore not been deemed unreasonable based on the Consumer Contracts Act (1994:1512). Despite this, the Consumer Agency has observed that the setting of such requirements by insurance companies in the customer communication can constitute unauthorised marketing according to the Marketing Act (2008:486), as the requirements breach mandatory provisions in DAL and FAL. The Swedish Consumer Agency has now asked the insurance companies to respond to the criticism.
The Swedish Consumer Agency's criticism should be viewed as a reminder to all insurance companies and other financial companies that supply products and services to consumers that it is not sufficient that the contractual terms applied follow applicable consumer protection rules unless the customer communication and customer service in general do so. We therefore recommend that insurance companies and other financial companies review their contractual terms, communication policies and training for employees to ensure that each element in the business fulfils applicable consumer protection rules.
At Lindahl's Financial Services team, we have long experience of helping companies that are under the Swedish Financial Supervisory Authority's supervision with both regulatory and marketing law advice. You are welcome to get in touch with us if you have questions or if your company is in need of advice.