20 March 2020

This article was written by Natalie Lim & Anna Davis. 

Given the unprecedented impact of the coronavirus outbreak, and that many customers are currently in a vulnerable position, the FCA expects insurers to be aware of the circumstances that their customers find themselves in. 

In general:

  • Firms must consider carefully the needs of their customers and show flexibility in their treatment of them
  • Consumers’ ability to claim should not be affected by circumstances over which they have little control
  • Firms should clearly communicate any policy exclusions that may impact the cover and use of individual policies, ensuring that they clearly meet consumers’ demands and needs. This applies to both new sales or changes to existing policies (either mid-term or at renewal). 

Additional guidance is provided in relation to each of the specific topics listed below:



FCA guidance


Operational resilience and business continuity

General insurance firms are reminded that it is essential to have plans in place to manage and mitigate the operational impact of coronavirus.

Firms are expected to:

  • Have sufficiently robust systems and controls to continue operating effectively in a stressed situation, with business continuity plans to manage this.
  • Have a Senior Manager responsible for business continuity and for managing the impact of COVID-19.
  • Act fairly, honestly and professionally in accordance with the best interests of customers.
  • Ensure that all customer communications are clear, fair and not misleading.
  • Consider the impact of staff absences and the need to ensure staff wellbeing on continuity of service.
  • Identify how staff absence or inability to use business premises can be sufficiently mitigated to ensure critical services are provided to customers.
  • Notify the FCA (via the usual supervisory contacts), where firms identify gaps through their planning that will or could cause harm to customers.


Travel insurance

The FCA expects insurance firms to continue to treat customers fairly during the whole product cycle (including purchase, claim and renewal) and has provided specific guidance in relation to a number of scenarios:

  • Where existing customers’ policies are impacted by COVID-19 (e.g. future travel booked before the outbreak), firms should clearly communicate any policy exclusions that result from coronavirus to existing customers.
  • Where consumers have bought annual travel insurance and are relying on renewal to cover travel arrangements made before the COVID-19 outbreak escalated, the terms of the current policy may allow for a pay-out when the event causing the cancellation or curtailment occurs.
  • If the claim arises after the renewal date, the FCA expects insurers to treat customers fairly, taking individual circumstances into account. This includes where the policyholder was given a reasonable expectation that cover would continue. Where appropriate, firms should renew or consider claims under the terms of the original policy. 


Motor and Home Insurance

In response to government advice and the emerging coronavirus situation, many people will be changing the locations from which they carry out certain activities and store certain items (e.g. working from home and keeping work-related items at home).

The FCA expects motor and home insurers not to reject claims because of customers’ understandable temporary change in how they use their vehicle and home address, in response to government advice.


Private medical insurance

Due to increased demand for hospital access, private hospitals have been asked to support the NHS. While the exact nature of support is currently unknown, it is likely to have an impact on consumers with private medical insurance who are currently receiving treatment or due to receive it. 

As most privately insured treatment is likely to fall under non-urgent care and may need to be postponed due to the current situation, the FCA urges insurers to communicate effectively, compassionately and in a timely manner with customers. 


Product suspension

Firms may wish to suspend some product offerings to manage their risk exposure. In these circumstances, the FCA’s expectations of firms are as follows:

  • Firms must consider the needs of their customers carefully, in particular where 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).
  • Where consumers are due to renew their policy, insurers should clearly explain the policy coverage and exclusions to them in all circumstances. Insurers should consider any exceptional cases of policyholder need and communicate all changes clearly. 
  • Firms must not sell alternative products to customers if the alternatives do not meet their demands and needs and are not in their best interest.



Where firms are contemplating making changes to their existing policies at renewal, they must:

  • Consider the existing requirements for product design.
  • Consider the needs and particular circumstances of individual consumers (factoring in any vulnerabilities) when contemplating what may be an appropriate change to make.
  • Be able to demonstrate that they are complying with FCA rules and TCF.

Where firms are changing their policies to exclude coronavirus, in relation to customers whose policy is due to renew, the FCA expects insurers to make clear, in a prominent position, that their policy has changed, and to highlight the exclusion before renewal. 

The FCA also expects firms to highlight exclusions to potential customers (via other relevant communications), to ensure that their messaging is fair, clear and not misleading. 


Mid-term adjustments

If firms intend to make mid-term changes to existing policies, the FCA expects them to consider the following:

  • Whether there is a written term in the contract that states that they are able to make the change that they want to make.
  • Whether the terms that they intend to rely on are fair and transparent under the Consumer Rights Act 2015 (or the Unfair Terms in Consumer Contracts Regulations 1999 if appropriate).
  • Whether they are applying the term properly, in accordance with the contract (e.g. by complying with any notice period set out in the contract).
  • Whether due regard has been given to:
    • the interest of their customers and TCF (FCA Principle 6);
    • the information needs of customers and communicating information in a way that is clear, fair and not misleading (FCA Principle 7).
  • Whether there is any other reason in law or any other relevant FCA rules, and their compliance with them.


Expectations of brokers

The FCA encourages brokers to keep up-to-date with market developments so they can suitably advice their clients.

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