The regulator exclusively spoke to Insurance Age for the Broker Extra event.
The Financial Conduct Authority has outlined the steps brokers should take to operate effectively and fairly throughout the coronavirus pandemic.
The ongoing outbreak has seen brokers faced with helping clients with business interruption queries, difficult trading conditions, new rules around premium credit and working from home.
Matt Brewis, director, General Insurance and Conduct Specialists at the watchdog, told Insurance Age: “The test of impact on business continuity has really been one of the early impacts of coronavirus.”
He was speaking at the virtual Broker Extra even which runs from today (8 July) to 10 July. There is still time to sign up to join the conversation, view exclusive speaker sessions and join the state of the art networking platform.
Brewis added: “Across the board firms have done a really good job and there has been a huge change in approach in terms of how people work and working really effectively.”
He explained that as the regulator the FCA has prioritised protecting consumers.
“Two areas where work has been focused are around value of products and how to assist customers suffering from financial difficulty.”
Since the lockdown was announced the watchdog has issued a number of guidelines to firms on how customers can get better value from their insurance e.g. seeing premiums go down as they use cars less during lockdown.
The FCA has also issued guidelines on premium credit, rebates etc.
Brewis stated: “Overall we’ve seen some really good examples of treating customers fairly where firms have gone above and beyond.”
The strategy has been to try to highlight where companies are doing good work within FCA guidelines in order to publicise that and make it the standard.
He explained that solutions are not a one-size-fits-all approach and differ depending upon the consumer and the product.
BI test case
Brewis also addressed the business interruption case the FCA has brought on behalf of policyholders against insurers.
Although he was unable to go into detail about the legal proceedings he reinforced the view that the outcome of the case will affect more than just the insurers named in the proceedings.
“It is not just about the insurers and wordings we have included,” he noted.
Insurers who believe their policies could be affected had until today (8 July) to submit this to the regulator.
Brewis revealed: “Next week a list will be published of all business interruption products that could be affected.”
He said affected providers should communicate this to their customers and brokers should also keep customers informed of any updates to the business interruption case.
Brewis also addressed some of the other issues affecting insurance brokers.
A key concern going forward is the potential for underinsurance for SMEs following Covid-19 as the market hardens and premium costs increase and, potentially, businesses can’t afford the right cover.
“Yes, we are concerned about this. Every customer should be able to take the insurance they need.”
Brewis also warned that, as a result of the pandemic, the FCA may change how it views insurers and brokers in future.
Finally, he noted that issues under scrutiny prior to the virus were still relevant. He flagged the delayed dual pricing report as something the FCA is still looking at. However he did not give a date as to when the delayed document might come out.
Broker resilience is also high on the agenda at the regulator.
It recently surveyed brokers to assess their financial strength.
“Financial resilience is very important. We are focusing on quantifying the risk and understanding that.”
He also urged brokers not to sideline work on the Senior Managers & Certification Regime (SM&CR). Although that legislation has been pushed back to next March.
“Firms still need to focus on this,” Brewis concluded.
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