Featured Product

    FCA Guides Insurers on Product Value Assessment During COVID Crisis

    June 03, 2020

    FCA published finalized rules and guidance for insurance firms to assess the value of their products in light of the COVID-19 crisis. The draft guidance was published in May 2020 and was subject to a short consultation period. FCA received 32 responses from interested stakeholders. FCA also published its feedback statement that includes summary of the feedback received on the draft guidance. This guidance is relevant to all firms involved in regulated activities related to all non-investment insurance products—that is, in general, insurance and protection policies and, in particular, firms that have manufactured these products. The guidance takes effect from June 03, 2020.

    The guidance is intended to highlight what firms should be doing now to identify any material issues arising from COVID-19 that affect the value of their products and their ability to deliver good customer outcomes, during this unprecedented time. Firms will need to ensure that they are meeting the relevant product governance requirements for all insurance products, including the need for regular reviews. FCA expects firms that are manufacturers and/or product providers to consider whether and how COVID may have materially affected the value of their insurance products. The effects of the pandemic may mean that:

    • Firms are no longer able to provide expected contractual benefits, either in the expected form, to the expected timeframe, or at all. For example, where fulfilling claims involves service providers whose movements are restricted because of lockdown, or some medical covers where customers cannot access certain benefits.
    • There has been a reduction in the chance of underlying insured events happening for any holders of the policy, for example, due to government lockdown or other circumstances connected with the COVID pandemic, resulting in a fundamental change in risk for the firm and resulting in the product providing little or no utility to customers. 

    These changes could affect the intended value being delivered to customers of certain insurance products. The FCA expectation is that a firm should prioritize a product-level assessment that is restricted to cases where the firms or the product itself cannot deliver a benefit, or where there has been a reduction in the risk of an underlying insured event happening so that the product now provides little or no utility to consumers. Some firms may choose to go further than this, which we would be welcome, but not required. This guidance does not create an expectation that firms should reassess the value of policies because of COVID-19 where claims are still generally possible but the likelihood of a claim may have changed. Firms should complete their review of product lines and decide on resulting actions by no later than December 03, 2020. Firms can also assess the longer term impact of COVID-19 on their insurance products on an ongoing basis beyond the six-month period. FCA will review this guidance in the next six months in the light of developments regarding COVID-19 and may revise the guidance, if appropriate.

     

    Related Links

    Effective Date: June 03, 2020

    Keywords: Europe, UK, Insurance, COVID-19, Product Value Assessment, Governance, FCA

    Featured Experts
    Related Articles
    News

    UK Government to Set Out Rules on Wind-down of Critical Benchmarks

    HM Treasury notified that, after considering all responses, the government intends to bring forward further legislation, when the Parliamentary time allows, to address issues identified in the consultation on supporting the wind-down of critical benchmarks.

    May 07, 2021 WebPage Regulatory News
    News

    EIOPA Launches Stress Test for Insurance Sector in EU

    EIOPA launched the 2021 stress test for the insurance sector in EU.

    May 07, 2021 WebPage Regulatory News
    News

    UK Authorities Publish Third Edition of Regulatory Initiatives Grid

    UK authorities jointly published the third edition of Regulatory Initiatives Grid setting out the planned regulatory initiatives for the next 24 months.

    May 07, 2021 WebPage Regulatory News
    News

    EC Consults on Regulation on Non-Financial Sustainability Disclosures

    EC is requesting feedback on the proposed Commission Delegated Regulation on the content, methodology, and presentation of information that large financial and non-financial undertakings should disclose about their environmentally sustainable economic activities under the Taxonomy Regulation.

    May 07, 2021 WebPage Regulatory News
    News

    OSFI Outlines Prudential Policy Priorities for Coming Months

    OSFI has set out the near-term priorities for federally regulated financial institutions and federally regulated private pension plans for the coming months until March 31, 2022.

    May 06, 2021 WebPage Regulatory News
    News

    BIS Announces TechSprint on Innovative Green Finance Solutions

    Under the Italian G20 Presidency, BIS Innovation Hub and the Italian central bank BDI launched the second edition of the G20 TechSprint on the lookout for innovative solutions to resolve operational problems in green and sustainable finance.

    May 06, 2021 WebPage Regulatory News
    News

    ACPR Publishes Version 1.0.0 of RUBA Taxonomy

    ACPR published Version 1.0.0 of the RUBA taxonomy, which will come into force from the decree of January 31, 2022.

    May 06, 2021 WebPage Regulatory News
    News

    EBA Proposed Regulatory Standards for Central Database on AML/CFT

    EBA proposed the regulatory technical standards on a central database on anti-money laundering and countering the financing of terrorism (AML/CFT) in EU.

    May 06, 2021 WebPage Regulatory News
    News

    ECB Responds to EC Consultation on Crisis Management Framework

    ECB published its response to the targeted EC consultation on the review of the bank crisis management and deposit insurance framework in EU.

    May 06, 2021 WebPage Regulatory News
    News

    BCBS, CPMI, and IOSCO to Survey Market Participants on Margin Calls

    BCBS, CPMI, and IOSCO (the Committees) are inviting entities that participate in market infrastructures and securities markets through an intermediary as well as non-bank intermediaries to complete voluntary surveys on the use of margin calls.

    May 05, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6942