FCA's expectations of insurance firms
Over the last couple of weeks, the FCA has been publishing information and guidance for firms in relation to the COVID-19 crisis. In addition to its general update on COVID-19, the FCA has set out specific expectations of insurance firms.Operational resilience and Senior Managers
Unsurprisingly, building on its work in this area earlier in the year, the FCA emphasises the importance of 'operational resilience' and the need for firms to have in place business continuity plans to manage and mitigate the impact of the crisis.
The FCA also confirms that it expects a Senior Manager to be responsible for managing the impact of the virus. Given that the crisis could cause staff absences (including Senior Managers), whilst firms should consider the wellbeing of their staff first and foremost, they should also consider how absences might impact on their obligations from a governance and Senior Manager regime perspective. We explore this in a separate blog here.
An overarching theme coming from the FCA for the insurance market at the moment is 'flexibility'. The FCA is demonstrating its own flexibility by reviewing its work plans and prioritising certain work over others - see our blog here for more information on this. More recently, the FCA has also requested certain firms to delay publishing their financial accounts.
For insurers, the FCA is clear that it expects them to show flexibility in their treatment of customers at this time. This includes when considering claims, offering renewals or adjustments of products and suspending or terminating products. The key (and familiar) messages stressed by the FCA here are treating customers fairly (TCF) and effectively communicating with customers. Insurers should take particular note of the FCA's suggestion that in some circumstances the non-renewal or suspension of a product for a particular type of customer may fall foul of the TCF rule. This is yet another demonstration of the FCA's focus on protecting vulnerable customers obtaining and maintaining insurance cover. See also our blog on the FCA's work on customers with medical conditions obtaining travel insurance.
Where there does not seem to be any flexibility however is in firms meeting their regulatory obligations to protect consumers and market integrity. Firms should get in touch with the FCA if they are facing any difficulties and the FCA notes that it is in active dialogue with firms and trade associations on the issues the market is facing.