FCA has set out its position on how it expects insurers to act given the unprecedented impact of Covid-19. Above all, it expects firms to consider very carefully the needs of customers and to be flexible in how they treat them. FCA makes it clear it does not expect to see policyholders’ ability to claim impacted by circumstances over which they have little control and urges firms to be clear on their communications of exclusions that may impact a policy, whether on new sales, renewals or mid-term changes.
Firms must also ensure they have in place plans that will manage and mitigate the operational impact of Covid-19, particularly in respect of systems and controls, a responsible Senior Manger, and methods that ensure customers’ best interests are met and that communications are clear, fair and not misleading. Firms should be looking at how to provide critical services in the absence of staff, and should notify FCA if they identify gaps that could cause customer harm.
Key areas already identified by FCA are:
- Travel insurance – where it expects firms clearly to communicate the impact on existing policies and renewals – and to take account of situations where a renewing policyholder was given a reasonable expectation that cover would continue;
- motor and home insurance – FCA is clear that it does not expect insurers to reject claims where consumers are temporarily working at home or using their vehicle in a different manner to usual;
- private medical insurance – insurers will need to be effective, timely and compassionate in communicating with customers whose privately insured treatment is non-urgent and may therefore need to be delayed;
- product suspension – FCA understands firms may want to suspend some product offerings but says they must consider their customers’ needs carefully, in particular where customers are relying on renewals to continue cover, and should not sell customers alternative products that do not meet their demands and needs or are not in their best interest;
- renewals – and the need to consider product design. If firms are now wishing to exclude coronavirus they must make it very clear and prominent. Firms must also be able to show they are treating customers fairly and complying with FCA’s rules if they are making any change, and to make exclusions clear in all communications; and
- mid-term adjustments – firms need to be very careful if they wish to do this, not least considering whether there is a written term in the contract that would enable them to make the change and whether the terms they want to rely on are fair and transparency under the CRA, as well as whether they have considered the TCF position.
Although most of its messages are aimed at insurers, FCA calls on brokers also to keep abreast of developments so they can advise their customers properly.