One of the business models most used by insurance companies and distributors to promote the sale of insurance products is the use of so-called distance marketing techniques, specifically by engaging third-party service providers to make telephone calls.
Indeed, the use of telemarketing or call center companies can serve as an excellent means of reaching a larger number of customers or even of entering a specific market segment.
Similarly, insurance companies or insurance distributors operating under the branch or freedom of services regime – and which, as a result, have little or no physical presence in Portugal – may view this business model as the ideal way to develop and expand their operations.
However, it is important to note that these call center entities must follow a set of rules, not only those imposed by insurance companies or distributors (such as scripts or operational procedures to be implemented), but also legal and regulatory requirements. In fact, when promoting and marketing insurance products, the call centre company’s employees are distributing insurance, as defined by the Legal Framework for the Distribution of Insurance and Reinsurance (RJDSR). Although this regime does not apply to the telemarketing company itself, as it is not an insurance distributor, it does apply to the operators who come into direct contact with the end customer.
In effect, these operators will be regarded as persons directly involved in the insurance distribution activity (PDEADS) of the insurance intermediary or insurance company that has contracted the call center, and are therefore required to comply with the requirements for access to that activity, namely those relating to appropriate qualifications and good repute.
Compliance with these requirements aims to protect customers/consumers, ensuring that PDEADS are properly qualified to provide the necessary information and explanations regarding the insurance products that customers may purchase. However, call center companies do not always have staff members who possess the required appropriate qualifications, which will necessarily entail hiring new staff with that specific training or, alternatively, enrolling some of their staff in specialised courses, which will entail an additional burden in terms of cost and time.
In addition to these requirements, given that insurance products will be sold over the telephone, call centre companies will also have to comply with the rules governing contracts for financial services provided to consumers via means of distance communication, particularly with regard to pre-contractual information obligations.
In fact, this regime requires operators to provide potential customers with a range of information relating to the service provider, i.e. the insurance company (such as its identity, address, registration number and ASF number), the financial service, i.e. the insurance product (such as its main features, the price/premium, payment instructions), the insurance contract (existence of a right of free withdrawal, applicable law and competent court) and protection mechanisms, such as the existence or absence of out-of-court dispute resolution mechanisms and how to access them.
Furthermore, the call center operator must clearly state, at the start of the call, their identity and the commercial purpose of the contact.
Given the wide range of obligations applicable to this type of distribution, it is essential to have specialist legal support to ensure compliance with these obligations in advance.
The team of lawyers in the Insurance Law Department at Belzuz Abogados, S.L.P. – Sucursal em Portugal has extensive experience in providing legal advice to insurance brokers and national and international insurance companies, as well as to call center companies, and can be of significant assistance in interpreting and applying the Legal Framework for the Distribution of Insurance and Reinsurance.