Travel insurance and coronavirus (Covid-19)

The pandemic has had a significant impact on the way we all travel. The risks associated with travelling have changed and the insurance against those risks has also changed. When buying travel insurance, customers cannot rely on their pre-pandemic knowledge and experience. We expect firms to take account of the changes to the travel landscape in their marketing, sale, design and monitoring of travel insurance products.

We expect firms to consider their regulatory requirements in the changed travel market. This includes requirements relating to communication (including marketing), sale standards, demands and needs, product governance and relevant coronavirus guidance we have issued. Our expectation is that firms must make sure they continue to treat customers fairly during the whole product cycle.

Communication

Firms must make sure that their communications with customers are clear, fair and not misleading, and should not use terminology that customer’s might not understand. We have seen firms advertising and selling products which have ‘coronavirus cover’ or ‘enhanced Covid-19 cover’. These terms do not have a commonly understood meaning and can reflect very different types of cover depending on the firm. 

Sale standards

We expect that customers and prospective customers should be provided with clear information and understand the  extent that travel products will protect them against coronavirus-related risks. Firms selling travel insurance must make sure that customers are given appropriate information about a policy so that they can make an informed decision. This will include providing clear information about the policy including the main benefits, limitations, conditions and exclusions including those relating to coronavirus, regardless of experience level of the customer and whether the customer has previously bought a travel policy from the firm. Where exclusions are in place, they should be sufficiently clear so that customers understand the impact and situations in which the policy will not pay out.

Demands and needs

When selling an insurance policy, firms must only offer customers travel insurance that meets their demands and needs.

Product governance

Firms manufacturing new insurance products or making significant adaptations to existing products, are required to apply a product approval process under our product governance rules before marketing or distributing that product. Where firms are making changes to an existing product, they must consider whether these changes are significant enough to trigger the product approval process. This includes adding any material exclusions from cover . A change to an existing product to exclude the insurer’s liability for risks relating to coronavirus, in whole or in part, is likely to amount to a significant adaptation of the insurance product.

In addition, our coronavirus guidance on product value set expectations for firms to consider the value of their products in the light of the pandemic. Product manufacturers should now have reviewed their products to identify if coronavirus affected the intended value of these products.

As part of ongoing product monitoring, we expect firms to consider available information which could indicate that the product has distributed outside of the identified target market or that the customer experience does not match what the firm had anticipated. This could include the number of claims being declined and the reasons why.