The Financial Conduct Authority (FCA) reports that some consumers with pre-existing medical conditions (PEMCs) struggle to obtain affordable travel insurance for their conditions. To combat this, insurers and brokers are now required to signpost consumers to where they can find a choice of specialist providers. Charlotte Gregory and Fern Dempsey from our Financial Services team report below.
The FCA recently conducted a review on travel insurance signposting rules for consumers with medical conditions. The new rules were intended to improve access to travel insurance for consumers with more serious pre-existing medical conditions (PEMCs). The FCA introduced the rules for PEMCs in Policy Statement PS20/3.
The FCA acknowledged that many consumers with serious PEMCs struggle to find travel insurance covering their condition at a price that they consider to be affordable. Medical costs have risen, resulting in higher premiums for some consumers with PEMCs and consequently, a lower demand for travel insurance. In 2021, in a bid to combat this, the FCA introduced new rules to assist consumers with more serious PEMCs navigate the travel insurance market.
The new rules mean that, in some circumstances, consumers will be signposted to recognised directories of specialist firms to purchase insurance suitable for their needs. The regulator states that it will continue to engage with the directories in order to refine and improve their content, and to consider whether firms can cover a range of health scenarios. This is anticipated to increase the accessibility of travel insurance for consumers with more serious PEMCs.
Recently, in April 2024, the FCA published its post implementation review of the rules. The regulator revealed that its intervention and implementation of sign-posting rules was “positive” and resulted in an additional 21,000 policy sales.
It is reported that “most” firms have complied with the new rules. However, the FCA intends to follow up with relevant firms in which it has identified non-compliance with the travel insurance signposting rules. In addition, the regulator wants to see higher standards of consumer protection as outlined under the Consumer Duty, and that firms must ensure that consumers are getting fair value from their travel insurance products, so that all customers are being supported to make good financial decisions.
Going forward, the FCA set out that they would consult on the adjustment of the premium threshold, namely where the medial condition premium is £100 or more.
How can we help?
If your business requires assistance or further information on remaining compliant with the rules on travel insurance and for consumers with PEMCs, or the obligations under the Consumer Duty, reach out to our Financial Services team.
