Why is it important for an insurer to provide a written notice before cancellation?

Providing a written notice before cancellation is important for ensuring legal compliance. Insurers are required by law to notify policyholders if they intend to cancel a policy and often must specify the reasons for the cancellation. This written notice serves to protect the rights of the policyholders, allowing them to be aware of the changes in their coverage and providing them an opportunity to seek alternative insurance options or rectify any issues that may lead to cancellation.

Without this written notice, insurers may not adhere to statutory requirements, which can lead to legal disputes and regulatory penalties. Legal compliance also fosters trust between the insurer and the insured, as it establishes transparency in the insurer's operations and communications.

While building customer relations, promoting new products, and increasing market share are important objectives for insurers, the primary reason for requiring a written notice before cancellation is rooted in the necessity to comply with the legal frameworks governing insurance practices.