The watchdog said that insurers must be prepared for a change in the way that their customers are behaving - such as individuals choosing to work from home or commute by car. These changes should not impair on consumer’s ability to claim under home and motor policies but insurance companies must communicate any policy exclusions relating to coronavirus to their existing and new customers.
Highlighting exclusions is especially important for travel insurance cover, the FCA said. And where customers are relying on renewing their existing travel policy to cover a trip that was booked before the spread of COVID-19 escalated, the watchdog said it would expect insurers to pay out under the terms of the existing policy.
“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,” Christopher Woolard, interim chief executive at the FCA, said on Thursday. “We would not expect to see a customer’s ability to claim affected by circumstances over which they have little control.”
U.K. insurers, including Admiral, Aviva and Liverpool Victoria, have been either scaling back the scope of their travel insurance, or have stopped selling policies outright, since the global outbreak of the coronavirus.
And insurance consultancy Mactavish has warned that insurers could raise premiums and reject more claims to make up losses from investments that would in turn have a wider business impact on a U.K. economy already teetering on the edge of recession.
The FCA said Thursday that it expects insurers to consider the needs of their customers, especially those who are relying on a renewal for continuity of cover.
“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,” the watchdog told insurers.
And any alternative products offered to customers must meet their demands and needs and be in their best interests, the regulator said.
The FCA also called on general insurers to have plans in place to manage the impact of the virus on their operations. This includes having systems and controls in place to continue operating and appointing senior managers to take responsibility for managing the impact of COVID-19.
And insurers must consider how staff absences will affect their services and mitigate the risks that has on customers.
The FCA has said it will concentrate on ensuring consumer and market protection during the coronavirus pandemic. This means delaying or postponing other supervisory plans.
--Additional reporting by Martin Croucher. Editing by Tom Mudd.
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