Amidst the chaos that the COVID-19 pandemic has caused in our daily lives, we are slowly but surely trying to adapt to the new way of work. But as financial advisers and FSPs, what are our main responsibilities during such a time of crisis? In a recent communication, the FSCA outlines its main expectations regarding the approach and main responsibilities of financial institutions in these trying times.
Business Continuity
The FSCA expects all entities to review their business continuity plans and assess the impact of the COVID-19 on their operational ability. “Plans need to be put in place to deal with the current situation and mitigate any risks or potential risks that have been identified due to COVID-19 which could possibly impact their operational ability.” The ability to deliver services within the agreed and communicated service level agreements with customers is essential. Ongoing communication with all stakeholders regarding the impact on process and procedures is of utmost importance.
Claims, Renewal and Lapses
1. Claims
Our attention is drawn to the fact that the current situation might have a detrimental impact on claims due to delays in obtaining documents or parts, the ability of assessors to conduct necessary assessments, and third parties required to satisfy the claim (like appointed electricians not wanting to visit policyholder premises). However, entities must endeavour to avoid delays in settling any claim, including those for funerals. Where delay is unavoidable, any delays must be clearly and pro-actively communicated to customers. It is important to provide reasons for the delays as well as manage expectations. It is also expected of entities to take additional measures to minimise the impact of delays and to be as flexible as possible regarding claim requirements, given the current circumstances.
It is also important to note that:
| ● | Any exclusion or other material clause that is impacted by COVID-19 must be clearly communicated to all current and potential policyholders as soon as the impact has been identified by the insurer; |
| ● | Any new exclusions or requirements introduced during the period of the COVID-19 crisis must first be discussed with the FSCA; |
| ● | The location of certain activities, such as the assessment of damages or the obtaining of blood samples must be re-considered and made as safe as possible for policyholders or potential policyholders; |
| ● | Any medical requirements must be re-assessed to ensure that no unnecessary stress is caused to the current Health Care System of the country; |
| ● | There should be no delay in any claims payments after a decision to settle the claim has been taken; |
| ● | No additional costs or fees should be added during this period as a result of additional work that might need to be done to investigate claims. |
- Renewals and LapsesAlthough the FSCA understands that the industry needs to manage their risks and any additional exposure during this time, it wishes to highlight the following expectations:
| ● | Communication regarding renewals should be clear and any changes to policies due to the impact of the COVID-19 should be highlighted to the policyholder; |
| ● | Any additional premium reviews as a result of the impact of the COVID-19 should be communicated to the FSCA ahead of time with the impact of the premium review on policyholders; |
| ● | Additional measures should be considered to assist policyholders where possible not to lapse a policy due to the impact of the COVID-19 and possible alternative options should be communicated clearly and in advance to policyholders; and |
| ● | Additional measures should be considered to ensure that the communication regarding non-payments and possible lapses are communicated to the policyholders directly and clearly. |
Advisers and Intermediary Service Providers
Advice to customers at this time of uncertainty is so important and advisers have a key role to play in assisting customers in understanding the market and the impact of COVID-19 on insurance, investments and savings products. As a result, the FSCA expect advisers to stay abreast of developments and in contact with product suppliers so that they can provide customers with suitable advice.
“Many Advisers are also the holders of outsourced and binder delegations from product suppliers and are expected to comply with all requests from product suppliers which enable them to meet their oversight responsibilities. Binder and outsource functions can support delivery of services to customers and we expect co-operation to be such that fair delivery to customers is maintained,” according to the FSCA.
Click here to download FSCA Communication 12 that also underlines the expectations of banks, retirement funds as well as possible cyber-risk exposures.
