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 The draft guidance was published in May 2020 and was subject to a short consultation period.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 FCA also published its feedback statement that includes summary of the feedback received on the draft guidance.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

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    News

    HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets

    The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.

    January 12, 2022 WebPage Regulatory News
    News

    FCA Registers Securitization Repositories; PRA Issues 2022 Priorities

    The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.

    January 12, 2022 WebPage Regulatory News
    News

    EC Regulation Sets Out Methods for Measuring K-Factors Under IFR

    The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.

    January 11, 2022 WebPage Regulatory News
    News

    BIS Studies How Platform Models Impact Financial Stability & Inclusion

    The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.

    January 10, 2022 WebPage Regulatory News
    News

    ESAs Publish List of Financial Conglomerates for 2021

    The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.

    January 07, 2022 WebPage Regulatory News
    News

    APRA Licenses Two More Banks, Reduces Committed Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.

    January 07, 2022 WebPage Regulatory News
    News

    EU Issues SII Corrigendum; EIOPA Assesses SII Reporting Exemptions

    EU published, in the Official Journal of the European Union, a corrigendum to the Delegated Regulation 2015/35, which supplements Solvency II Directive (2009/138/EC).

    January 06, 2022 WebPage Regulatory News
    News

    EBA Opines on Impact of De-Risking and Associated AML/CFT Challenges

    The European Banking Authority (EBA) published an Opinion on the scale and impact of de-risking in European Union and the steps that competent authorities should take to tackle unwarranted de-risking.

    January 05, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7860