The Financial Conduct Authority (FCA) in the UK has launched a two-month consultation on proposals to help travellers with pre-existing medical conditions (PEMCs) find travel insurance products via ‘signposting’. Specifically, the FCA is looking for feedback on its proposal to introduce a directory of travel insurance firms that are willing and able to cover the kinds of serious PEMCs that may make finding cover difficult.
Under the proposal, travel insurers would be required to signpost consumers if their coverage was declined or cancelled mid-term due to their PEMC; if coverage was offered with a PEMC-related exclusion that cannot be removed; or if a consumer is offer cover where their PEMC results in an additional loading to their base premium.
As well as this initiative, the FCA plans to work with other industry stakeholders to improve consumer understanding and awareness of travel insurance, and the importance of disclosing and properly covering PEMCs.
According to FCA estimates, every year there are around 14.1 million consumers in the UK with PEMCs who seek to purchase travel insurance; of these, around 0.7 per cent are declined cover and 11 per cent purchase policies with an exclusion for the PEMC in question.
“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,” commented the FCA’s Executive Director of Strategy and Competition, Christopher Woolard. “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.”
Industry reaction to the proposals have been mixed. Hugh Savill, Director of Regulation at the Association of British Insurers (ABI) sounded a cautious note: “Insurers see the value of a system to signpost travellers who cannot get adequate cover because of their medical history. 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 itself says, ‘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.”
Liz Foster, Managing Director of the Society of Insurance Broking, was more enthusiastic, though she advised the FCA that it should seek to build on the work that the industry has already done. “We agree with the decision to introduce a requirement to signpost,” she said. “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 focus on high-quality 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, she added: “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 consumers’ experience throughout the signposting service, which can fully assess its benefits.”
While we at ITIJ wholeheartedly support any initiative that enables more people to get the coverage they need – after all, the endgame should surely be that everybody can travel safely and without fear of huge bills – it is important that the industry presents a united front on this issue. Hopefully through the consultation, all stakeholders will be able to make their voices heard, and an appropriate way forward can be devised that takes all requirements into account, from both a business and a consumer angle.