CICA sold accident and sickness insurance policies via self-employed agents. Between April 2008 and October 2010 it had 542,133 UK policyholders and received £47m in premiums for new business.
The FSA found CICA had failed to properly manage its sales processes, claims handling and complaints handling and was in breach of FSA Principle 3, relating to management and control, and Principle 6, relating to customers’ interests.
CICA did not properly ensure its agents had the skills and knowledge to provide advice and focussed on the number rather than the ability of its recruits, the regulator said.
The insurer did not ensure its agents recorded all the relevant information when advising customers on insurance products, the FSA said.
The regulator also found the remuneration structure for the sales force, a commission-only structure, was high-risk as it placed emphasis on sales volumes rather than the quality of sales.
CIVA did not take effective action against agents who had received complaints or broken company rules or properly monitor claims handling, the FSA said.
Tracey McDermott, acting director of enforcement and financial crime, said: “CICA’s widespread failures reflect a culture which did not recognise the importance of treating customers fairly (TCF).
“Firms must ensure that protecting the interests of their customers is at the heart of every aspect of their business.”
CICA settled early with the FSA and received a 30% discount on its fine. Without the settlement discount the fine would have been £4m.
