On the 8 July 2020 EIOPA (the European Insurance and Occupational Pensions Authority) issued a statement to outline its expectations in relation to how manufacturers of insurance products apply their POG (product oversight and governance) process in the light of the impact that COVID-19 may have on such insurance products.
EIOPA expects insurance manufacturers to identify any of their products which include features that may have been materially affected by COVID-19 and to assess whether there might be the risk of possible unfair treatment to consumers. A reduction in the risk being covered may result in reduced utility for the consumer and therefore possible unfair treatment. EIOPA warns manufacturers to avoid the risk of reacting too soon to temporary changes that are not durable in impact or of sufficient scale and therefore asks manufacturers to perform the assessment on a medium to longer term basis. Where such unfair treatment is identified, insurance manufacturers are asked to apply proportionate remedial measures to mitigate the detriment to consumers and prevent further occurrences of such detriment.
Manufacturers are asked to consider:
- Risk coverage, exclusions, key benefits and key product indicators that were assessed when the product was developed (such as loss ratios) and how these have been impacted;
- the extent of lockdown and measures implemented in different Member States and how these may have impacted the behavior and habits of consumers including mobility, liability risks, travel and access to services such as non-essential medical services; and
- a broad range of possible measures and their impact on products over the medium to long term.
EIOPA suggests some examples of actions which include adjustments to cover and benefits, extensions of guarantees through “tailor-made” clauses, higher no claims bonuses, offering additional services and cover, improved descriptions of product features to enhance clarity and in specific individual circumstances, proportionate rebates or premium repayments.
The full EIOPA statement may be found here.