The system consists in standardized home insurance policies, covering all 15 basic risks common to this type of product (e.g.: fire, storm, lightning), customers having the option to add extra coverage suitable to their needs.
MNB aims to make home insurance policies more transparent, simple to compare and overall easier to understand by homeowners. The main goal of MNB with this system is to promote the spread of financial products and services.
MNB decided to introduce the MFO system to the insurance market after the institution previously launched a consumer-friendly rating system for home loans, in September 2017. The consumer-friendly loans enjoyed a positive feedback from the market. In November 2019, there was a total of 60,000 loans given to consumers. After two years since its introduction, the consumer-friendly loan system represents roughly 60% of the total number of home loans from Hungary.
According to MNB, the MFO system will greatly enhance the consumer experience, by including stringent requirements from insurers. MFO policies will feature:
- a uniform approach between insurers, making MFO policies from different companies easier to compare,
- full digital support (most of the times clients can interact with the insurance company exclusively over the internet, from the initial offer to the claim settlement),
- customization of the product (by allowing consumers to add extra coverage to the basic MFO package),
- claims settlement deadlines (2 workdays for insurers to respond to the claim, 5 workdays for damage inspection to be done),
- details for the amount of indemnity, explaining the lower amounts of indemnity or the refusal to pay some damages,
- the possibility for customers to terminate their contracts within 30 days (currently a home insurance policy can be canceled only at the annual anniversary date); MNB will expect insurers to allow customers to switch to a new MFO policy before their current contract anniversary.