Time running out for insurers to consider COVID refunds review

Just 24 hours remain for insurers to consider regulatory guidance and, where appropriate, apply COVID-19 related refunds or discounts on insurance policies. Accountancy firm, BDO says this important review will require due, thoughtful and documented decision-making, supported by actuarial analysis.

The Financial Conduct Authority ordered the reviews as the value of some policies had diminished amid lockdowns, in particular motor, medical, household, EL and PL policies.
Insurers will have to decide whether they proactively offer discounts or refunds or only offer refunds if the insureds apply for one.

Alex Barnes, partner at BDO, says: “This is an important review at a time when many insurers are already dealing with a long list of other COVID-19 headaches. The business interruption Supreme Court cases and the huge number of claims from the travel insurance market have already made this one of the toughest years ever for insurers.”

Alex explains that the FCA will expect insurers to have documented a thorough review, to have had that review examined by the insurer’s compliance team and then reviewed and challenged at the board level by non-executives.

“After the deadline expires, we expect that the FCA will be selecting some insurers for a thorough examination of how they have dealt with this issue. If no action to reimburse customers has been taken, insurers must be ready to explain their reasons for this, Barnes added.

“It is likely that any action insurers have taken will be compared to the action taken by the rest of their peer group.”

“As this is a treating-the-customer fairly issue, fines and restitution orders could follow if the FCA thinks individual insurers have failed to take this review seriously and haven’t communicated with customers who have been adversely impacted.”

    Share Story:

Recent Stories

Financial institutions were early adopters of cyber security and insurance. Are they still on top of the game?
Managing huge amounts of sensitive data online makes financial institutions a prime target for hackers. As such, the sector was an early cohort for insurers in creating cyber cover. Since then, the market has evolved almost beyond recognition. It continues to challenge itself to this day, complying with rigorous regulatory demands and implementing avant-garde enhancements to keep abreast of the ever-changing risks. Published June 2021

Manufacturing: An industry at risk amid great technological change
Of the many sectors of business, manufacturing companies are among the most at risk from cyber threats. How has the sector evolved to make it so vulnerable and what does the task of managing cyber exposure in a manufacturing company look like? CIR’s latest podcast with Tokio Marine HCC sought to answer all these questions and more. Published April 2021