Large intermediaries and insurer partners are at "serious" risk of being investigated by the Advertising Standards Authority (ASA) and the Information Commissioner's Office (ICO), a new paper has revealed.
According to the ‘Protecting the Protectors' report, published by LifeSearch and Contact State, some life insurance firms are using fraudulent short-term tactics amid misleading advertising, the reselling of consumer data and impersonation of insurance brands.
The report also states that: "Disreputable lead generation activity is driving clawback rates and increasing industry bad debt."
As well as laying out ASA advertising standards and FCA stipulations, the paper shines a light on the practices being used by ‘rogue' online lead generators, while exploring how the life insurance industry can mitigate, control and stamp it out by setting a transparent universal standard of "data exchange and certification".
The report states: "The answer is not to stifle innovation or take a heavy handed regulatory approach. Instead, we believe that the industry should create a ‘gold standard' of lead generation and reward those affiliates, intermediaries and insurers who create better outcomes for the consumer.
"To do this we believe that every single life Insurance lead should have an accompanying certificate created at the source and start of the customer journey by an independent technology business. That certificate will certify the authenticity of the data, the advertising used and the veracity of the compliance information."
LifeSearch CEO Tom Baigrie said: "We are pleased to co-author this paper, which we hope begins to address many of the poor, and often fraudulent, practices being used to generate leads in the protection market. The result is often consumer detriment, which is potentially damaging for all parties across the industry in the long term."
Alain Desmier, managing director of Contact State, added: "Our unambiguous mission is to remove fraudulent lead generators from the protection industry. We're very proud to stand alongside LifeSearch and make recommendations in this paper that we believe will lead to much better customer outcomes."
Oliver Rayner of Caspian Insurance Services described the issue as an "urgent" one that "needs to be addressed".
"I have a particular concern with the type of misleading and fraudulent adverts that are being widely used to generate consumer interest in protection products," he said. "Caspian Insurance was the first life insurance intermediary to use Contact State and I am very supportive of the recommendations within this paper."
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