Insurers given 6 months to make COVID-19 adjustments

The Financial Conduct Authority has called on insurers to review the value of their policies in the wake of the coronavirus-pandemic and to take appropriate action where necessary within the next six months. The call is part of the regulator’s final product review guidelines, mooted early last month, which have now been finalised.

Sheldon Mills, interim executive director of strategy and competition at the FCA said “the exceptional circumstances of coronavirus may have materially reduced the value” of some insurance products. Its new 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.

Mills added: “Firms may choose to go further than this guidance, and we recognise that some firms have already taken steps to support customers, which we welcome.”

The guidance calls on insurers to review products where benefits cannot be provided, such as boiler services due to lockdown measures, or where there has been a fundamental change in risk and products are now providing little or no utility to customers, such as public liability insurance for closed businesses.

The FCA has given insurers six months to review their product lines and decide on any resulting actions. It said these could include changing how benefits are delivered, refunding some premiums or suspending monthly payments for a certain period of time.

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