Although there are other possibilities for taking out distance insurance products, they generally correspond to sales through a website or telephone and may be carried out directly by the insurance company (i.e. without the use of other intermediaries) or through insurance intermediaries, who subcontract call center services, for example.
Distribution through these means creates some challenges, in that the customer/purchaser, usually the weaker party in the contractual relationship, is not physically on the premises of the insurance distributor and appears totally unaccompanied before entering an insurance contract. To prevent the customer from deciding without being fully aware of what they are contracting, the law requires that, in addition to the pre-contractual duties set out in the legal framework for insurance and reinsurance distribution, there are other information duties to be complied with, specifically established for this type of situation.
These duties are set out in Decree-Law 95/2006 of May 29, which establishes the legal framework applicable to distance contracts for financial services concluded with consumers, who are understood to be “any natural person who, in distance contracts, acts in accordance with objectives that are not part of their commercial or professional activity.”
Information obligations must be communicated on paper or on another durable medium available and accessible to the consumer, in time and before the consumer is bound by an offer or a distance contract. For this purpose, a durable medium is one which allows the information addressed personally to the consumer to be stored, allowing easy access to it and its unaltered reproduction in the future, for the period appropriate to the purposes for which the information is intended. If the consumer takes the initiative to conclude the contract and the means of distance communication chosen by the consumer does not allow the information and terms of the contract to be transmitted, the supplier must comply with these obligations immediately after the conclusion of the contract.
The pre-contractual information to be provided is subdivided into four main groups:
(i) Information on the service provider: this includes, among other things, the identity and main activity of the provider, the registered office or professional domicile where the provider is established; the identity of the professional other than the provider with whom the consumer has business relations, if any; the registration number at the commercial registry office; indication of whether the provider’s activity is subject to a necessary authorization regime and identification of the respective supervisory authority;
(ii) Information relating to the financial service: this includes, for example, a description of the main characteristics of the financial service; the total price payable by the consumer to the provider for the financial service, including all commissions, charges and expenses incurred and all taxes paid through the provider; additional costs for the consumer arising from the use of means of distance communication, payment instructions; and the period of validity of the information provided;
(iii) Information on the contract: the existence or non-existence of the right of withdrawal, with an indication of its duration and conditions of exercise; the minimum duration of the distance contract, in the case of permanent or periodic contracts; the rights of the parties with regard to early or unilateral termination of the distance contract, including any penalties arising therefrom; the law applicable to the distance contract and the competent court provided for in the contractual clauses;
(iv) Information on protection mechanisms: namely the existence or non-existence of out-of-court means of resolving disputes and how to access them.
If we are dealing with distance selling via voice telephony, the provider must unequivocally state their identity and the commercial purpose of the contact at the beginning of the communication. After obtaining the consumer’s express consent, the provider is only obliged to provide the following information:
a) Identity of the person contacting the consumer and their relationship with the provider;
b) A description of the main characteristics of the financial service;
c) The total price to be paid to the provider for the financial service, including all taxes paid through the provider, or, where an exact price cannot be indicated, the basis for calculating the price so that it can be verified by the consumer;
d) Indication of the possible existence of other taxes or costs which are not paid through or invoiced by the provider;
e) The existence or non-existence of the right of withdrawal, indicating where this exists, its duration, the conditions for exercising it and the amount that may be demanded from the consumer.
Given the consequences that failure to provide pre-contractual information can have for each of the parties involved, it is essential that whoever oversees, provides compliance with all the legal requirements before contracting. The of – Sucursal em Portugal has an extensive experience in the legal compliance of distance contracting procedures.