The Financial Conduct Authority (FCA) has announced a two-month consultation period into its proposal to introduce a new ‘signposting’ rule that provides travellers with pre-existing medical conditions (PEMCs) with a directory of travel insurance firms that have the “appetite and capability” to offer them travel insurance.
Under the proposal, insurers will also be required to signpost policyholders when their coverage is either declined or cancelled mid-term because of a PEMC, when offered cover with an exclusion for a PEMC that cannot be removed, or when offered cover with an additional loading to their base premium due to their PEMC.
“We want to reduce the numbers of consumers, who are currently faced with a choice of not travelling or travelling without insurance, and running the risk of incurring significant costs, including medical bills abroad,” said Christopher Woolard, executive director of strategy and competition at the FCA. “The changes proposed today will be an important step in helping people to navigate the market more easily and also in reducing the number of customers who are over-paying significantly for travel insurance.”
Reacting to the proposal, Liz Foster, managing director of the Society of Insurance Broking (SIB), said that, while she agreed with the decision to introduce a signposting rule for PEMC travellers, the FCA should build on good practices that already exist in the industry.
“We agree with the FCA’s decision to introduce a requirement to signpost,” said Foster. “We believe the duty to offer signposting is already implied by the requirement in the insurance distribution directive for anyone selling insurance to ‘act in the best interests of their customers’. We also agree with the FCA’s focus on a high-quality of communication during the screening process, and on being clear to clients about how their condition is taken into account when making decisions about setting premiums and offering cover.”
“[However], we would also urge the FCA to build on existing good practice as it develops its new signposting service. While it is important to have consistency across the sector, consistency is only one element in creating good outcomes. It is essential that the FCA develops a system to measure consumer’s experiences throughout the signposting service, which can fully assess its benefits.”
Meanwhile, Hugh Savill, director of regulation at the Association of British Insurers (ABI), was more critical of the proposal and urged the FCA to take a more “proportionate” approach.
“Insurers see the value of a system to sign-post travellers who cannot get adequate cover because of their medical history,” said Savill. “But the FCA’s proposals would sweep up every single medical condition, however slight its impact on a premium. Travellers need a more proportionate approach, which avoids confusion and disruption to the customer journey. As the FCA themselves say, ‘further shopping around will not always help’. We will be urging the regulator to establish a more targeted approach to help those who could genuinely benefit.”
