Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
The Financial Conduct Authority has issued guidance to insurers.
Firms must have robust systems and controls and business continuity plans to manage the situation and continue to deal with customers, and specifically must have a senior manager responsible for managing the impact of coronavirus.
Any insurer considering making a mid-term adjustment to policy terms must consider whether the terms allow variation, whether it’s permissible in law, and whether due regard has been given to the interests of customers and treating them fairly. On renewal, policy coverage and exclusions need to be explained clearly on renewal, and any exceptional cases of policy needs must be considered. When making changes to policies on renewals, firms must consider the requirements for product design and follow appropriate processes. Any new exclusion of coronavirus must be highlighted before renewal, very clearly and in a prominent position. Alternative products should not be sold to customers which do not meet their demands and needs and are not in their best interests. Any firm wishing to suspend a product offering must first consider the needs of its customers carefully, especially where the customer is relying on a renewal for continuity of cover (considering any vulnerabilities) - failing to renew a product may amount to failure to treat the customer fairly.
Insurers are expected to consider customers’ needs very carefully and show flexibility. They must clearly communicate any exclusions which may impact cover (both at the time of sale and when any change is made), and they should not deny coverage because of changes in customers’ circumstances over which they have little control. More specifically:
- Travel insurers must clearly communicate relevant policy exclusions to their existing customers. Treating customers fairly will include dealing in an appropriate way with claims where customers had to renew or extend their existing policies as a result of coronavirus.
- Motor and home insurers must not reject claims because a consumer has understandably made a temporary change to their home address or how they use their vehicle (e.g. commuting to work by car) in response to government advice. Motor insurers should continue to provide cover for cars where the owner has been unable to obtain an MOT certificate in line with government policy.
- Private medical insurers should communicate effectively, timeously and compassionately with customers whose treatment has to be delayed due to coronavirus
The guidance also notes that brokers have a key role to play in advising customers and sourcing suitable cover, and expects them to stay abreast of developments.