On 5 February 2020, the Financial Conduct Authority (FCA) published a policy statement on Signposting to travel insurance for consumers with medical conditions (PS20/7). The new FCA Handbook rules will require firms to include details of a directory of firms that will cover people with pre-existing medical conditions within 30 days of the directory going live (expected to be in Summer 2020). The other requirements in PS20/7 need to be implemented by 5 November 2020.
What’s the background to the policy changes?
The FCA is concerned that consumers with pre-existing medical conditions face obstacles to finding affordable travel insurance. Cover can often be declined, offered with exclusions for their condition or offered at an unaffordable price.
The FCA issued a Call for Input on this concern in June 2017, followed by a feedback statement and then proposals for new requirements for firms to signpost certain consumers towards a directory of travel insurance firms that cover consumers with more serious pre-existing medical conditions.
A directory of providers
PS20/7 requires firms to provide details of the directory where is consumer is: declined or otherwise not offered cover, or has had cover cancelled mid-term; offered cover with an exclusion for a pre-existing medical condition that cannot be removed; or offered cover with a loading to their premium (of over £100) based on their medical condition. The FCA is working with the Money and Pensions Service to provide the directory.
Insurance intermediaries or price comparison websites only need signpost where all the providers being considered either decline to quote; offer cover with exclusions that cannot be removed or provide a quote above a £100 premium loading threshold. If the intermediary does not know that there has been a loading of premium of £100 or more, it must direct the consumer towards the directory.
At renewal firms should consider whether an annual policy will meet any of the triggers and signpost to the directory, if required.
Where firms sell policies with the possibility of removing an exclusion for a private medical condition, the consumer should be told that the exclusion can be removed.
The FCA will introduce guidance on how firms assess risk in respect of medical conditions and should calculate premiums using reliable information that is relevant to the risk. Firms must also consider their obligations under the Equality Act 2010.
The new proposals will be welcomed by a significant number of UK customers who currently face barriers to getting affordable travel insurance. The changes will hopefully reduce the number of uninsured consumers and may even drive up competition amongst providers who can offer affordable cover.