FCA sets out expectations from general insurers during coronavirus pandemic

By Anoop Khanna

The UK’s Financial Conduct Authority (FCA) has set out its expectations from general insurers and has also provided information for consumers about what they should seek from their insurance provider during the coronavirus pandemic.

The FCA release provides information on travel, motor and home, and private medical insurance. It also provides clarification in relation to suspension of products and policy renewals.

FCA interim chief executive Christopher Woolard said, “We have already seen some firms make significant efforts in difficult operating conditions. We expect all firms to be clear and not misleading whenever they communicate and be fair and professional in how they deal with their customers.

He said, “Customer behaviour is changing. We expect insurance firms to recognise this and treat their customers fairly, recognising the circumstances customers may find themselves in. We would not expect to see a customer’s ability to claim affected by circumstances over which they have little control. Any customer concerned about their insurance should consider contacting their provider with any questions they may have.”

“We expect firms to clearly communicate any policy exclusions that may impact the cover and use of individual policies. This applies both to new sales or changes to existing policies (either mid-term or at renewal) – they must clearly meet consumers’ demands and needs, “ said Mr Woolard.

The FCA lists the guidelines for all general insurance firms to have plans in place to manage and mitigate the operational impact of coronavirus.

FCA said, “Insurers should consider, along with other challenges, the impact of staff absences and the need to ensure staff wellbeing on continuity of service. Firms must identify how staff absence or inability to use business premises can be sufficiently mitigated to ensure critical services are provided to customers. Where firms identify gaps through their planning that will, or could, cause harm to customers, they should notify the FCA through their usual supervisory contact.

“Many consumers are currently in a vulnerable position because of the coronavirus (COVID-19) pandemic. We expect insurers, given the unprecedented impact of coronavirus?????, to be aware of the circumstances that their customers find themselves in.

“We expect firms to consider very carefully the needs of their customers and show flexibility in their treatment of them. We are likely to see customers’ behaviours change because of the pandemic. For example, this could mean that customers may need to work from home or commute by car. We would not expect to see their ability to claim impacted by circumstances over which they have little control.”

Firms must consider whether the customer is relying on a renewal for continuity of cover (taking into account any vulnerabilities). In such circumstances, it may not be treating customers fairly if a firm were to not renew (even though the product would otherwise be suspended).

FCA said consumers who are due to renew their policy should have the policy coverage and exclusions clearly explained to them in all circumstances. Any exceptional cases of policyholder need should be considered by the insurer and all changes need to be clearly communicated.

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