The Financial Supervisory Commission yesterday said it was to rein in sales of product replacement and repair schemes by telecoms and consumer electronics retail groups, which it said were in fact insurance products subject to its jurisdiction.
Telecoms and retail outlets have been bundling general liability insurance policies they have purchased into product replacement schemes that are sold to consumers, Insurance Bureau Deputy Director-General Shih Chiung-hwa (施瓊華) told a news conference in Taipei.
The practice does not conform to the regulations and companies involved are urged to adopt forthcoming rules, to be launched toward the end of this year, Shih said without providing a concrete timeframe.
Shih said that the commission and insurance industry associations are devising new requirements that are to reclassify product replacement schemes as a general insurance product only to be sold by general insurers and certified sales staff.
“No insurance product may be sold by entities other than qualified insurance providers, and a clear line must be drawn to distinguish between personal property insurance and warranty against manufacturing defects,” Shih said.
Under the new rules, the reclassified “smartphone insurance” products are contracts between individual consumers and general insurers, but the policies may still be distributed by telecoms and retail outlets, provided that sales staff have the required certifications, Shih said.
To help distributors adapt to the change, the commission and insurance industry associations were devising new exams to help salespeople earn the required certification to sell smartphone insurance policies, Shih said.
Similar to precedents set for auto insurance salespeople, the new exams would be simplified and made relatively easy, as they only concern the sale of a single type of insurance product, she said, adding that the commission is prepared to offer frequent exams to cope with anticipated demand.
“Following the transition, we do not expect consumers to see significantly higher monthly premium payments for the same coverage for their smartphones,” Shih said.
Meanwhile, Shih said that the commission has been in talks with Apple Inc regarding the company’s AppleCare+ add-on purchase, following the launch of an official store in Taiwan.
Shih said that Apple was willing to work with regulators to meet local compliance rules, but she declined to offer further details because the information is private and part of the US giant’s trade secrets.
Shih also declined to outline Apple’s arrangement with US regulators and whether the model might be feasible in Taiwan, as that information was considered a trade secret as well.
Industry observers have estimated the local market for smartphone insurance at about NT$1 billion (US$32.7 million) annually.
Taiwan’s top three telecoms have been offering smartphone replacement schemes since 2015, each contracting 300,000 to 600,000 customers, who pay monthly premiums of about NT$98 to NT$298, the commission said.
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