Recent regulatory developments of interest to insurers and their intermediaries. Includes the UK FCA latest expectations of firms following the BI insurance test case, and more.
- COVID-19: FCA Dear CEO letter on BI insurance test case and outcome table
- Pre-existing medical conditions: BIBA travel insurance directory
- Supervision of control functions: IAIS consults on draft Application Paper
COVID-19: FCA Dear CEO letter on BI insurance test case and outcome table
On 22 and 29 January 2021, the FCA updated its webpage on its business interruption (BI) insurance test case. The FCA has published:
- a Dear CEO letter on the FCA's next steps and its expectations of insurers (and managing agents);
- a table setting out the outcome of the test case and key paragraphs of the judgments according to policy type in the representative sample of 21 policy wordings; and
- a policy checker and FAQs to help policyholders find out if their insurance policy may cover BI losses caused by coronavirus and what they can do next.
In the Dear CEO letter, the FCA states that the Supreme Court judgment gives insurers the clarity they need to conclude their claims processes with the large majority of BI insurance customers. The FCA encourages all insurers to do so as quickly as possible. In some cases, the judgment will mean that previously rejected claims (and complaints) are now valid or that the value of customers' valid claims will have changed. The FCA expects insurers to be clear on these points and on next steps as they write to policyholders with affected claims or complaints over the coming week.
The FCA states that it is essential that insurers reassess and settle claims quickly in light of the Supreme Court judgment, including making interim payments on policies where the claim has been accepted (either in full or in part) but elements of the calculation or agreement on the final settlement remain outstanding.
The remainder of the Dear CEO letter includes sections on:
- claims handling;
- deductions for Government support;
- reassessing complaints;
- communications with policyholders;
- providing information to the FCA on affected policies;
- further legal proceedings; and
- policies and perils outside the scope of the test case.
Pre-existing medical conditions: BIBA travel insurance directory
The FCA has updated its webpage on its policy statement, PS20/3, on signposting to travel insurance for consumers with pre-existing medical conditions (PEMCs) to announce that the British Insurance Brokers' Association (BIBA) has launched a travel insurance directory for people with serious PEMCs. This directory meets the FCA's criteria for a Medical Cover Firm Directory and means there are now two directories that meet the FCA's criteria, the BIBA one and the Money and Pensions Services directory confirmed by the FCA on 8 October 2020.
Going forward, all firms that offer retail travel insurance must include details of at least one of the confirmed directories on their websites, in accordance with the timing requirements in the FCA's Insurance Conduct of Business sourcebook (ICOBS) rule 6A.4.3R. This is to help ensure consumers have access to the directories before the signposting requirement is introduced on 26 April 2021.
Supervision of control functions: IAIS consults on draft Application Paper
The International Association of Insurance Supervisors (IAIS) is consulting on a draft Application Paper on the supervision of control functions in the insurance sector.
The draft Application Paper describes practices aimed at helping supervisors address issues related to the supervision of control functions as described in the Insurance Core Principles (ICPs) and the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). In particular, the paper supports observance of ICP 8 (Risk management and control functions) and is relevant to ICP 5 (Suitability of persons) and ICP 7 (Corporate governance).
The consultation closes on 26 March 2021. The IAIS intends to hold a webinar on 10 February 2021 to discuss the paper.