Fair Treatment of Customers: A Working Guide

Fair treatment of customers in insurance is not a poster on the wall. It is what you do when a customer asks a question you could answer in a way that sells more, or in a way that helps more. This guide shows what fair treatment looks like in sales, service, renewals and claims, so that you can recognise it on an ordinary Tuesday.

What good conduct means

A customer buys insurance before anything has gone wrong. They pay for a promise. They cannot see the product, and they rarely read the whole document. So they trust the person in front of them. Good conduct means that the trust is deserved.

Most rulebooks reduce this to four ideas. Different regulators use different words, but the ideas are the same everywhere:

Honesty. You say true things and do not leave out facts that change the decision.
Fairness. Two customers in the same situation get the same treatment, and no customer is trapped by a small detail they could not have known.
Clarity. The customer understands what they are buying, what it costs and what it does not cover.
The customer's interest. When your target and the customer's need point in different directions, you do not choose the target.

Your firm has written policies for conduct, and the regulator where you work sets the formal rules. This guide cannot replace them. It shows how the ideas work when no rule gives the answer.

Honesty, fairness, clarity and the customer's interest

Take each idea and ask what it means in a real job.

Honesty at the desk. A customer asks, "Does this cover my phone if I leave it in the car?" You do not know. Honest conduct is "I will check the wording and tell you", not "Yes, probably". Guessing to keep the sale moving is the most common small dishonesty in insurance.

Fairness in a queue. Two customers call about the same late payment. One is polite, and one shouts. Fair conduct gives both the same options, the same time to pay and the same information about the consequences.

Clarity in writing. A letter that is correct but impossible to follow is not clear. If the customer must call to ask what it means, the letter failed.

The customer's interest in a target month. It is the last day of the month. A customer wants a cheaper policy with less cover. You earn more on the bigger one. Putting the customer's interest first means you explain both, say what they lose by choosing the cheaper one, and let them decide.

When the rules are silent

No rulebook covers every call. Sooner or later a customer arrives with a situation nobody wrote a procedure for. A good test has three questions:

Would I be comfortable if this customer could see exactly what I am doing and why?
Would I be comfortable if my manager read my file note aloud to the whole office?
If the customer were my parent, would I do the same thing?

If any answer is no, stop and ask a supervisor or the compliance team. Write down what you asked and what you were told. That is not weakness. It is how good conduct becomes habit.

Plain language for cover, exclusions and excesses

The most common unfairness in insurance is not a lie. It is a sentence the customer did not understand. Three words cause most of the trouble: cover, exclusion, excess.

An exclusion is something the policy does not pay for. An excess is the part of a claim the customer pays first. Many customers hear "excess" and think it is an extra cover. Explain both with one example from the customer's own life.

Say a customer has a home policy with an excess. A good explanation: "If a pipe bursts and the repair costs a certain amount, you pay the first part yourself. The insurer pays the rest. The part you pay is the excess. It is written on page two of your schedule."

Do not read the wording back. Say what it means. Our article on explaining exclusions and excess in plain language gives more phrases and a way to check the customer understood.

Information before the decision, not after

A fact told after the customer has paid is not a fact that helped them decide. Fair treatment puts the important information early:

the price, including any fee
the main exclusions that affect their situation
the excess
how to cancel, and any cost to cancel
how to complain

A sales call that rushes through the key points in the last thirty seconds, after the customer has said "yes", fails the test even if it ticks a box. Put the facts first. Then ask for the decision.

Recognising and supporting vulnerable customers

Any customer can become vulnerable. A bereavement, a health problem, a job loss, a language barrier or a lost phone can change how a person understands and decides. Vulnerability is a state, not a label.

Signs on a call include a long silence, repeated questions about the same point, a very quiet voice, mention of a hospital, or someone prompting in the background. Signs in writing include confused replies and missed deadlines.

What you do next is simple. Slow down. Offer to repeat. Offer another way to receive information. Ask whether they want someone to help. Record the need, with consent, so the next person does not start again. Recognising a vulnerable customer on a call gives examples of phrases that help. Your employer's vulnerability policy says what you must record and who to inform.

Never make a decision for the customer, and never use their situation as a chance to sell something. Time, patience and clear options are the support.

Suitable, not merely sellable

A product is suitable when it fits what the customer needs and can afford. A product is merely sellable when the customer would say yes. These are different things.

Say a young driver asks for the cheapest car policy. A seller offers the lowest price and moves on. A fair adviser notices that the cheapest version has a large excess and no courtesy car. They ask, "If you had an accident, could you pay this amount on the day?" The customer may say yes and choose it anyway. That is a fair outcome. Or the customer may say no and choose a different excess. That is a better outcome. The key is that the question was asked.

Needs-based selling in insurance walks through the questions that work. The pattern is: ask about the situation, show a fitting option, explain what is missing, and let the customer choose.

Commission, targets and conflicts

Many insurance staff earn more when they sell more, or sell particular products. That is a conflict of interest, and it is normal. Fair conduct does not pretend it does not exist. It manages it.

Three practical rules:

If a commission or target could change your advice, your firm's policy decides how to disclose or manage it. Know that policy.
Never recommend a product because of the bonus.
If a customer asks, answer honestly, or tell them who can answer.

If a target puts you in a position where you cannot give fair advice, tell your manager. Many firms have a route for this. Silence is not a safe choice.

Renewals without loyalty penalties

At renewal, a customer who has stayed for years sometimes pays more than a customer who just joined. That is a conduct risk. The regulator in your country may have a rule on it. Whatever the rule, the principle is simple: a loyal customer should not be punished for loyalty.

When a price goes up, the customer should hear the reason in plain words and be told about their options. Explaining a renewal price increase honestly shows how: give the price, say what changed, name one or two options, and do not pretend that the rise is smaller than it is.

Do not hide the cancel route. A customer who wants to leave should find it as easy as the customer who joined.

Claims as the promise being kept

Selling is the promise. Claims is where it is kept or broken. Customers remember how a claim felt long after they forget the price.

Fair claims handling means:

acknowledging the claim fast
asking only for documents you need
giving a clear timeline and keeping to it
paying what is owed without making the customer chase
explaining a decision in language they understand

When the answer is no, the customer deserves more than a template. Explaining a declined claim to a customer shows how to name the reason, point to the wording, and tell them how to challenge the decision. A decline can be fair and still be handled badly.

A worked example. A customer's phone is stolen from a bar. The policy excludes theft from an unattended bag. The customer said it was in the bag at the table. The handler cannot approve but also does not know whether it was unattended. A fair handler asks open questions, checks the report, makes a decision on the evidence and writes the reason in clear words. If the decision stays no, they explain the complaint route, and mention any independent body that reviews such decisions where they work.

Products designed for a real target market

Conduct starts before a customer arrives. A product built for one group but sold to another will produce unfair outcomes however politely it is explained. A travel policy with a low medical limit may suit a weekend trip, not a month abroad for an older customer.

If you work in sales or service, you meet the product's real customers every day. Tell the product team when you see a mismatch: customers surprised by an exclusion, calls that repeat the same confusion, claims that fail for the same reason. That feedback is part of conduct, not a complaint about the job.

Everyday decisions where conduct is tested

Conduct is tested in small moments. Look at a few that come up in almost every role:

A customer asks you to backdate a policy. You cannot, and you explain why without blame.
A customer says they will cancel unless you waive a fee. You follow policy, and you also tell them honestly what the fee covers.
A colleague says "just tick the box, they will not read it". You do not, and you say why.
A customer who sounds unwell asks you to hurry. You offer to call back at a better time.
You notice a mistake in your own work that favoured the firm. You report it and fix it, even if no one would find out.

These choices are rarely written in a rule. They are what separate a firm that follows rules from a firm that treats customers fairly.

Common mistakes

Treating the script as the goal. Reading every line while the customer is lost.
Answering a question you do not know. Guessing to keep the call moving.
Hiding the exit. Making cancellation harder than purchase.
Using jargon. Saying "excess" or "subrogation" without explaining.
Moving a hard conversation to email. To avoid it, not to help.
Writing nothing down. If you did not record the vulnerability or the promise, the next person will not know.

Quick reference

Moment	Fair question to ask yourself
Before you answer	Do I know this, or am I guessing?
Before you recommend	Does this fit what they told me?
Before you close the sale	Have they heard the cost, the exclusions and how to leave?
During a hard call	Does this person need more time or another way to talk?
At renewal	Would I explain this price to the customer's face?
At a declined claim	Can they repeat back why, and what they can do next?

Questions people ask

Is fair treatment only about following the law?

No. The law and the regulator set the minimum. Fair treatment is about outcomes: did the customer understand, get a product that fits, and get a fair result when they claimed? A firm can follow every rule and still treat customers badly.

What should I do if my target conflicts with the customer's interest?

Put the customer first, and tell your manager about the conflict. Most firms have a route to raise it. Do not carry it alone.

Do I need to explain every exclusion?

Explain the ones that matter for this customer's situation, and make sure they know where to read the rest. A list of twenty exclusions read at speed helps nobody.

Who sets the conduct rules where I work?

It depends on the country and the type of firm. Usually an insurance or financial conduct regulator sets rules, and your employer turns them into procedures. Your compliance team can tell you which apply to your role.

Can a customer complain about something that was legal?

Yes. A customer can complain about any experience. A complaint about something legal may still show a gap in how the firm treats people. Handle it with the same care.

Learn this in five minutes

The track "Principles Every Insurance Employee Should Know" practises honesty, fairness, clarity and the customer's interest through short everyday cases. Its five lessons cover what good conduct means, how poor conduct causes harm, and what to do when the rules say nothing.