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UK regulator tells insurers how to behave in crisis

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UK regulator the Financial Conduct Authority (FCA) has laid down its expectations of insurers as the coronavirus pandemic begins to bite businesses and consumers alike.

While the Australian regulator has had little to say to insurers about how they should behave during the crisis, the more aggressive FCA has made it clear to insurers that they must show flexibility in responding to the changing situation of customers during the coronavirus emergency and ensure claims are not unfairly rejected.

“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,” FCA interim CEO Christopher Woolard said.

Firms have been told to clearly outline any exclusions, both on new sales or with changes to existing policies, and to take into account shifting consumer behaviours, including the need to work from home or commute by car.

“We expect motor and home insurers not to reject claims because of a consumer’s understandable temporary change in how they use their vehicle and their home address, in response to government advice and the emerging coronavirus situation,” the FCA says.

It warns on fair treatment for travel policies, including where customers may have bought annual insurance, and for policies purchased before the start of this month.

The FCA says it understands firms may want to suspend some insurance product offerings, but it may be unfair to some customers not to renew, particularly if they are relying on a renewal for cover continuity.

And it warns against selling alternative products that don’t meet consumer needs and aren’t in their best interests, and says any moves to make renewal or mid-term changes to policies “should follow appropriate processes and comply with laws and regulations”.

“While we appreciate that firms are trying to manage their exposure to risks, we want to make clear our expectations of how firms deliver this change,” it says.

“We expect firms to consider the needs and particular circumstances of individual consumers, taking into account any vulnerabilities, when considering what may be an appropriate change to make.”

Insurers have also been told it is essential to have plans in place to manage and mitigate the operational coronavirus impacts, and a senior manager should have responsibility.

And FCA has also advised brokers to make sure they keep abreast of developments.

“In these uncertain times, brokers have a key role to play to help consumers understand the market, the impact of coronavirus, and search the market for products that meet their demands and needs.”