On 1 May 2020, we published draft guidance for insurance firms on assessing the value of their products in light of Coronavirus (Covid-19). This was subject to a short consultation period, which closed on 15 May.
We wanted to act quickly to protect consumers in these difficult times. The draft guidance was therefore subject to a short consultation period, which closed on 15 May. We received 32 responses from interested stakeholders including firms, trade bodies, consumer groups, charities and individuals
We are now publishing our finalised rules and guidance[2], subject to a small number of changes. This includes changes to clarify that firms:
- should consider the value of products where, due to the impact of coronavirus, there has been a material reduction in risk so that they are providing little or no utility to customers, and not just where claims are no longer possible
- are not expected under this guidance to assess value on an individual customer level, but should consider our guidance on helping customers in temporary financial difficulty as a result of coronavirus
- can assess the longer-term impacts of coronavirus on their insurance products on an ongoing basis beyond the 6-month period we have set out for product reviews resulting from this guidance
Who this affects
This guidance is relevant to all firms carrying on regulated activities relating to all non-investment insurance products, ie general insurance and protection policies and, in particular, firms who have manufactured these products.
Actions and next steps
The guidance comes into immediate effect upon being made on Wednesday 3 June 2020.
Firms have until 3 December 2020 to review their product lines in light of the impact of coronavirus and decide on any resulting action.
We will review the guidance within 6 months of it coming into effect in light of developments around coronavirus to assess whether it is still needed.