The FCA urges insurance companies to review their product lines and take decisions on any resulting actions within six months
FCA issues new guidance to insurance companies amid Covid-19 crisis. (Credit: Free-Photos from Pixabay)
The UK Financial Conduct Authority (FCA) has issued guidance for insurance companies in the country to consider the effect of coronavirus (Covid-19) on the value of their insurance products.
According to the financial regulatory body, the guidance outlines what it considers firms should be doing to recognise any material issues that impact the value of the general insurance and protection products they offer, and also their ability to deliver good customer outcomes, during the prevailing health emergency.
It also sets out that insurance companies should focus on reviewing products where benefits cannot be offered or where there has been a fundamental change in risk and products are now giving hardly any use to customers, such as public liability insurance for closed businesses.
As per the FCA, the guidance is not intended to give an expectation that insurers should reassess the value of insurance products where the probability of a customer making certain claims may have gone down, but the product continues to provide utility.
FCA wants insurance companies to review and come to a decision within six months
The FCA urges insurance companies to review their product lines and take decisions on any resulting actions within six months. This could include changing how benefits are provided, refunding some premiums, or suspending monthly payments for a certain period of time, said the financial regulatory body.
The regulator said that the guidance comes into immediate effect. It further said that, in light of developments related to Covid-19, the guidance will be reviewed in six months, and could be revised if appropriate.
FCA strategy and competition interim executive director Sheldon Mills said: “Customers should expect value from the insurance products that they buy, but the exceptional circumstances of coronavirus may have materially reduced the value they are getting.
“Today’s guidance is designed to protect consumers by directing insurance firms to review the products they offer to ensure they provide appropriate value and take action where there has been a fundamental change in risk or where certain benefits can no longer be provided.”