Yesterday (19 March 2020), the Financial Conduct Authority (FCA) announced a set of expectations for general (non-life) insurance firms regarding their treatment of customers in response to the Covid-19 pandemic. 

The overall message from the FCA is to: 

  • treat customers fairly, recognising the circumstances customers may find themselves in during this unprecedented time (including as regards mid-term adjustments and suspending product offered); 
  • maintain sufficiently robust systems and controls to ensure business continuity; and
  • communicate clearly with clients, particularly as regards any policy exclusions in both new sales and existing products. 

Any existing exclusions in insurance policies which may be relevant to Covid-19 must be brought to the policyholder’s attention and if the insurer is going to exclude cover for Covid-19 on renewals, then this change must be “very clear” to the policyholder and “in a prominent position”. The FCA notes that it may not be treating customers fairly to refuse to renew an existing product, even if it would otherwise be suspended in the circumstances.

While the FCA’s statement may be of some comfort to policyholders, it does not entail that insurers are obliged to extend cover beyond the extent implied by existing policy wording. In our previous post, we discussed coverage issues and, as we noted in that post, many policies are unlikely, on a strict interpretation of their policy wording, to respond to losses caused as a result of Covid-19. Businesses and consumers should look at their insurance policies, check the scope of coverage and discuss their position with their insurance brokers as soon as possible (and potentially submit a claim or a notification of circumstances).

How the insurance industry will respond and how strictly it will interpret policy wording in light of the FCA’s overarching message to “treat customers fairly” remains to be seen. Although statements were made by the Chancellor earlier in the week that discussions have been had with insurers regarding the recoverability under insurance policies which provide pandemic cover, details have yet to emerge and the FCA did not make any specific statements in this regard. We await further announcements from the government and the regulators on the recoverability under insurance policies in connection with Covid-19.