On 31 March 2020, the Financial Conduct Authority (FCA) updated its statement on what it expects insurers and brokers to do during the covid-19 pandemic. The update concerns the expectations for MOTs, product suspension and renewals. For the previous statement please read our earlier blog.
In light of the guidance from the Department for Transport for all vehicles due to have an MOT in the next 6 months, insurers are expected to provide cover for consumers’ car, motorcycle or van insurance due to their temporary situation, in line with Government policy of not being able to receive (and not needing) a new MOT certificate. This includes at renewal.
The FCA understands why firms may wish to suspend certain products in order to limit their exposure during this period. However, the FCA will expect firms to consider the needs of customers carefully, especially when a customer is relying upon renewal for continuity of cover. It may not be treating customers fairly if renewal is not available. Where policies are due for renewal customers should have policy terms clearly explained to them. Inappropriate alternative products should not be offered.
Firms changing policies at renewal must still take into account their obligations in respect of product design and product governance. If policies are amended to exclude coronavirus, the FCA expects firms to make it very clear to those consumers whose policy is due to renew, that their policy has been changed by the exclusion before renewal. Firms must be able to demonstrate that they are treating customers fairly when they consider making such changes.
Where firms are unable to contact customers during the outbreak they should continue to consider customers’ demands and needs. The FCA suggests that it may be that during a period where contact is not possible, continuity of cover will meet the obligation to treat customers fairly.