Context
The FCA has issued a reminder to firms that a review of the value of products in light of the impact of coronavirus should be completed by 3rd December 2020.
Key points to note
- In June 2020 the FCA published guidance which set out its expectations for both insurers and insurance intermediaries to consider the value of products in light of the circumstances arising from Covid-19, the full details can be found here: https://www.fca.org.uk/publications/finalised-guidance/product-value-and-coronavirus-guidance-insurance-firms
- The guidance highlighted that the impact of the pandemic could affect the value of insurance products for customers in particular where the constraints around Covid-19 have restricted the delivery of benefits or where changed circumstances mean that the product now provides little or no utility to customers.
- The FCA expects firms to review their product lines and take action where products have not delivered the intended value to customers. The actions taken could include providing alternative benefits, reducing premiums or partial refunds of premiums paid.
- Firms should continue to monitor product value as part of their normal product governance processes which should include the ongoing monitoring and regular review of insurance products and take action where necessary.
- The FCA expects firms to also take into consideration the additional guidance on dealing with customers in financial difficulty https://www.fca.org.uk/publications/finalised-guidance-coronavirus-customers-financial-difficulty-insurance-premium-finance-firms
Next actions
Firms should ensure that they complete a review of insurance products and take action where necessary. The completed review should be fully documented and any decisions made in respect of actions taken appropriately evidenced.