PS20/3: Signposting to travel insurance for consumers with medical conditions

Read PS20/3

Our changes aim to:

• reduce the number of uninsured consumers, who currently face a choice of not travelling or risk having to pay significant costs, including medical bills abroad
• reduce the number of consumers with PEMCs who are significantly overpaying for travel insurance
• reduce the number of consumers who feel frustrated and unable to navigate the market
• increase consumer confidence and trust in the travel insurance market

In addition to signposting, the FCA will be working with stakeholders to try to improve consumer understanding of the travel insurance market, including producing material on PEMCs. This information will help consumers understand the implications of travelling with exclusions, and how factors such as country of travel can impact medical costs and therefore travel insurance premiums.

What we are changing

Our changes will:

• Require firms to signpost certain consumers with PEMCs to a directory of specialist providers.
• Introduce guidance that firms selling travel insurance policies that exclude PEMCs should tell consumers whether and how these PEMC exclusions can be removed.
• Introduce guidance for firms reminding them to assess the risk from medical conditions and calculate medical condition premiums using reliable information that is relevant to assessing this risk. This will help make sure that consumers are quoted a fair premium which properly covers their circumstances.

Who this applies to

These changes will primarily be of interest to: 

• all firms that offer retail travel insurance, including insurers, Lloyd’s managing agents, intermediaries and appointed representatives
• banks that offer packaged bank accounts which include travel insurance
• insurance industry trade associations
• charities, particularly medical charities
• consumer organisations
• consumers, primarily those with PEMCs

Background to these changes 

Some consumers with PEMCs have problems navigating the market and finding affordable cover for their conditions.

Some are declined cover, only offered cover that excludes their PEMC or offered what they consider to be unaffordable premiums. 

In July 2019, we consulted on new requirements for firms to signpost certain consumers with PEMCs to a directory of travel insurance firms that are able and willing to cover consumers with more serious PEMCs.

We also consulted on new guidance to clarify how we expect firms to treat travel insurance customers with PEMCs.

We received 37 responses to the consultation from a range of stakeholders. These included both mainstream and specialist insurance firms, trade bodies, medical screening companies, charities, consumer organisations and price comparison websites.

This policy statement summarises the feedback we received to this consultation, our response and the final rules and guidance we are making as a result.

Update – July 2020

In April 2020 (see below), we announced we would allow firms to delay implementation of these measures, allowing them to focus on urgent priorities related to the coronavirus (Covid-19) pandemic.

We now believe firms should be in a position to implement the changes. As travel has resumed consumers with PEMCs will want to access specialist insurance. This is especially important as some travel cover may have coronavirus exclusions.

Expected next steps:

• We are working closely with Money and Pensions Service (MaPS). It is developing a directory of specialist insurance providers, which is expected for September 2020.
• One month after the directory goes live and is listed on our website, firms must include details of a directory on their websites.
• From 26 April 2021, firms must signpost certain customers with PEMCs to a directory (this allows a 9 month implementation period, as originally anticipated).

Next steps – 7 April 2020 update

The FCA supports firms’ reprioritisation to focus on preventing and mitigating consumer harm during the coronavirus (COVID-19) pandemic. We believe that the benefit to consumers from firms dedicating resources to dealing with critical functions in the short term may outweigh the harm from delaying the implementation of our signposting rules.

The FCA Board have made new rules which postpone the November 2020 start date for the signposting rules contained in this policy statement.

We are monitoring the situation, and will update stakeholders on the revised implementation date when we have more clarity on the impact of the coronavirus. 

Our rules requiring a firm to include details of a medical cover firm directory on its website 30 days after a firm becomes aware of an operational directory will commence on 1 June 2020. The Money and Pensions Service is currently developing a directory; however, it is not clear when this will be operational. We will update stakeholders on this in due course. 

Addendum – 7 April 2020 update

On 5 February 2020, we published our Policy Statement on Signposting to travel insurance for consumers with medical conditions (PS20/03), following a consultation of the proposed requirements in Summer 2019.

Unfortunately, 20 responses to the consultation were not reviewed in error. This was an isolated incident and has not affected other consultations.

We have now analysed these responses. The addendum outlines the representations and how we have taken those into account.

The FCA Board, having regard to the additional 20 responses, confirmed and re-made the Insurance: Conduct of Business Sourcebook (Access to Travel Insurance) Instrument 2020 (FCA 2020/03), and in light of stakeholder feedback to PS20/03 made 2 changes to the definitions in our rules to give more clarity about our expectations.

The changes to the instrument are attached in the Appendix of the addendum to PS 20/03.