The U.K. regulator has a message for insurers facing a likely deluge of coronavirus-related claims: play fair.
Customers have found themselves in unprecedented difficulties as businesses the world over shut down or change how they operate, and insurers must also be adaptable, the Financial Conduct Authority warned on Thursday.
“Customer behavior is changing,” Chris Woolard, the FCA’s interim chief executive officer, said in a statement. “We expect insurance firms to recognize this and treat their customers fairly, recognizing the circumstances customers may find themselves in.”
Holders of private medical, travel, motor and home insurance policies are likely to change their way of living as the pandemic escalates and companies should “consider very carefully” their needs, the FCA said. Insurers should alert customers renewing policies to any changes, and if firms want to alter terms of an existing contract, there must be a clause that allows them to.
“We expect all firms to be clear and not misleading whenever they communicate and be fair and professional,” said Woolard.
Insurers have sought to insulate themselves from future claims as coronavirus ruins vacations and leaves may Britons working from kitchen tables rather than the office. LV=, owned by German giant Allianz SE, stopped selling travel insurance policies last week, and other firms including Aviva Plc and Direct Line Insurance Group Plc followed suit.
The industry has worked to reduce its exposure to pandemics since the 2003 outbreak of SARS in Asia. Over the years, they’ve tightened up their policies, inserting communicable-disease exclusions to prevent potential losses. That means consumers and companies will bear the brunt of the cost for disruptions related to the virus — which has infected more than 217,000 people worldwide and left at least 9,000 dead.
“This FCA guidance provides clarity during this unprecedented global crisis,” a spokesperson for the Association of British Insurers said in a statement. “The FCA rightly recognizes that insurers are making significant efforts in difficult operating conditions.”
–With assistance from Silla Brush.
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