CII response to the FCA expectations
20 March 2020
30 March 2020
In response to the FCA setting out expectations for general insurance firms during coronavirus (Covid-19) pandemic, Matt Connell, Director of Policy and Engagement for the Chartered Insurance Institute, made the following statement.
“Where insurers have made a contractual commitment to cover a risk, they must clearly honour that commitment.
“Our research through the public trust index shows that, with some exceptions, the insurance sector does meet customers’ expectations on claims, and the insurance profession must maintain this performance by handling claims related to Covid 19 both fairly and sensitively
“The overall economic impact of Covid 19 is huge, and it can only be mitigated by an organisation with the tax raising powers of a government. To give things some perspective, in 2018 the London Market paid out £19.7 billion in claims, but the UK financial package for Covid 19 is currently £300 billion. It is not in anyone’s interests to try to reinterpret insurance contracts in the light of recent events in order to make insurers the mechanism for a Covid-19 bail out. It would simply place responsibility on insurers that no private sector organisation could sustain.
“As a result, insurers should be allowed to set the levels of risk and cover that are consistent with their risk appetite. However, we wholeheartedly agree with the FCA that these changes must be communicated effectively. These communications can only be clear if any changes in cover are done in a way that is consistent with the basic design and purpose of the product, and with the basic purpose of the insurance firm.
“The issues for insurers that we are seeing from Covid 19 highlight the important of professional advice for consumers. Although insurance has increasingly been thought of as a commoditised product, there is still a strong need for professionals who are able to talk to individuals and businesses about their circumstances and needs, and help them to plan a holistic approach to managing their risks, that includes insurance as a component of this wider solution. This is the only way of encouraging an understanding of what insurance can and can’t do, in a way that benefits consumers and helps them plan for the future.”.