The European Commission has published a paper setting out examples of best-practices relating to relief measures offered to the customers of financial services businesses in the COVID-19 crisis. The best-practice paper includes examples relevant to insurance.
The paper is the outcome of two roundtables including a number of participants from across the financial services industries, held in May and June 2020. Participants included members of Insurance Europe, representing insurance companies, and Bipar, representing intermediaries. The roundtable participants encourage financial institutions in the EU to follow the best practices set out on a ‘best-effort’ basis.
The examples of best practice measures suitable for insurance companies and intermediaries are set out below:
- Insurers are encouraged to take into consideration various practical implications of the COVID-19 crisis for the day-to-day activities of consumers and to demonstrate flexibility towards consumers and business clients who may not be able to fulfil their contractual obligations, or who may be forced to change their normal behaviour or who may be experiencing financial difficulties.
- Market participants are encouraged to continue to act in the best interests of consumers, throughout the lifecycle of their relationship with the consumer.
- Insurers are encouraged to process and assess claims and pay legitimate claims as quickly as possible. This also requires insurers to assess and settle any disputes over coverage and exclusions quickly, keeping in mind the interests of all policyholders.
- Insurers are encouraged to be open to requests from policyholders who find themselves in financial difficulties as a result of the COVID-19 pandemic to temporarily postpone regular payments of due premiums free of interest and charges. Conditions for payment deferral should not be so restrictive as to discourage policyholders from asking for help. Insurers should provide policyholders with clear information about the consequences of payment deferral.
- Insurers are encouraged to assess whether products whose main features or risk coverage have been materially impacted by the COVID-19 outbreak, remain consistent with the needs of the identified target market.
- Insurers are encouraged to adjust premiums to reflect changes in risk that have arisen due to the COVID-19 pandemic.
- Insurers, with the support of distributors and intermediaries, are encouraged to protect the interests of savers in long-term savings products by discouraging any hasty redemptions or reallocations of funds, which realise short-term losses due to falls in asset values caused by the pandemic.