The new FCA rules are part of a wider effort from the FCA to improve access to insurance for the most vulnerable in British society, including those suffering from medical conditions
British insurance regulator the Financial Conduct Authority (FCA) has launched a consultation on new signposting rules to help those with pre-existing medical conditions find the right cover.
The consultation is seeking views across the industry’s travel insurance providers and distribution channels, as well as charities with a medical interest, trade associations and customers with a pre-existing medical condition.
Under the proposed rules, firms will be required to signpost consumers towards more specialist insurance companies, with the capability and appetite to cover their existing risks.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “We want to reduce the numbers of consumers who are currently faced with a choice of not travelling or travelling without insurance, and running the risk of incurring significant costs, including medical bills abroad.
“The changes proposed today will be an important step in helping people navigate the market more easily and also in reducing the number of customers who are over-paying significantly for travel insurance.”
The FCA estimates there are up to 14.1 million consumers with a pre-existing medical condition searching for a travel insurance policy each year.
Of these consumers, approximately 0.7% were declined cover, and 11% purchased a policy with an exclusion for their condition.
The FCA is consulting on the draft rules until 15 September 2019.
Signposting needed across the insurance industry to help with medical conditions
Dr Kathryn Knowles, managing director of Cura Financial Services – an insurance broker trading as the Special Risks Bureau – believes signposting could help travellers suffering from a range of medical conditions.
She said: “There are many areas where signposting is a huge benefit, such as those living with HIV, cancer, diabetes or high BMI.
“You name it there’s a good chance they will get better terms of insurance by using a specialist broker.”
One specific type of consumer Dr Knowles believes will benefit if the proposed rules go ahead is those suffering from an existing mental health condition.
She said: “People that are living with mental health conditions can be quite nervous when applying for insurance because they don’t know what to expect and they don’t know if they will be listened to or respected.
“They can pick up the courage to talk to someone about their mental health only to be told they can’t have insurance
“They can be left with a letter saying they are declined cover, but there’s no help on what to do next.
“Signposting to specialist advisers is a much needed development across the insurance industry as a whole.”
How the FCA wants insurance companies to help those with medical conditions
In June 2017 the FCA issued a Call for Input to gather evidence around the issue of cancer sufferers being unable to obtain travel cover, or having to do so at unreasonably high rates.
A year later, the regulator analysed feedback and found it indicated consumers with a pre-existing medical condition struggled to find affordable cover and often gave up their search after initial unsuccessful attempts for three main reasons.
These were because their travel insurance application was declined, offered exclusions for their pre-existing condition or due to being presented with what they felt was an unreasonably high premium.
Under the new signposting proposals, when a consumer encounters any one of these barriers to accessing cover, the broker or insurance firm involved will be required to point them in the direction of several companies with the capacity and appetite to cover their risk.
Dr Knowles believes one of the main benefits of signposting will be the level of expertise and experience that can be accessed by consumers.
“The greatest benefit of signposting is speaking to someone that understands that person’s circumstances and has a proven track record of expertise,” she said.
“It’s very easy for companies to plaster their websites with ‘specialist’ or ‘UK’s leading expert’ with no proof to support the claim.
“This new process will hopefully help people to find the brokers that can truly make a difference when it comes to improving access to insurance.”