Explain the concept of 'treating customers fairly' with respect to policy servicing in insurance business.

Policy servicing is an important parameter to judge the insurance company's philosophy with respect to maintaining customer relationship in a long run. Policy servicing refers to the response given by the insurance company to any communication received from its policyholders. The Treating Customers Fairly (TCF) principle aims to raise standards in the way financial institutions carry on their business by introducing changes that will benefit consumers and increase their confidence in the financial services industry. This is a customer centric initiative aimed at improving the image and reputation of financial institutions by recognising the customers as one of the key stakeholders carefully and giving them the deserved treatment. This assumes most importance in the financial services industry keeping in mind that the customers park their hard earned money with them and depend on them based on the expected level of servicing. Moreover, a small dissatisfaction could lead to an irreparable damage to the institutions as well. Financial Services Authority ('FSA'), UK, has introduced this as a Code for compliance by the financial institutions. Specifically, TCF aims to: Help Customers fully understand the features, benefits, risks and costs of the financial products they buy. Minimise the sale of unsuitable products by encouraging best practice before, during and after a sale. In fact, Treating Customers Fairly is an integral part of Principle 6 of "Principles of Business" published by FSA, which states that a firm must pay due regard to the interests of the customers and treat them fairly. The retail regulatory agenda of FSA aims to achieve an effective and efficient market by treating the customers fairly. This is aimed to be achieved through a focus on capable and confident consumers, providing simple and understandable information to consumers, well managed and adequately capitalised firms which treat the customers fairly, and risk based and proportionate regulation.