The Financial Conduct Authority (FCA) has called for travel insurers to improve access to insurance for customers with pre-existing medical conditions.
The newly published feedback follows a Call for Input last summer, which aimed to gather evidence from people with pre-existing medical conditions who faced difficulties getting affordable insurance cover.
With around 15 million people in the UK living with at least one long-term health condition, this is a big issue.
In fact, it’s due to become an even bigger issue, with the FCA estimating that 18 million people will be living with a long-term health condition within the next decade.
The regulator is concerned about these customers finding it difficult to access the specialist travel insurance market. In order to resolve these concerns, the FCA plans to work with key industry stakeholders to create a new service, designed to redirect customers to specialist providers.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:
“People with pre-existing medical conditions feel poorly served by travel insurance. There are specialist services out there, but often people don’t know where to find them. We’ll work with industry to point people in the right direction and help dispel some of the myths and misunderstandings to ensure this market works better.
“This will also form part of our continuing work on insurance pricing practices which are designed to lead to long-term positive changes across the market.”
When the FCA published their Call for Input last June, it received a high level of interest including responses from individual consumers, many sharing stories about their own experiences of accessing the travel insurance market.
The FCA says that most stakeholders felt that it could be difficult for consumers who have, or have had, pre-existing medical conditions to find affordable travel insurance.
Within the responses, a number of distinct themes emerged.
The FCA heard about a lack of quality information on the alternative options available to consumers after they had received a high quote or been refused insurance cover. This can result in customers assuming they are uninsurable, so they don’t try to get cover elsewhere.
They also found a general lack of consumer understanding, and a lack of understanding within the insurance industry, about the insurance terms and risk factors that are considered by providers when calculating the insurance premium.
Finally, a theme emerged about a lack of transparency around pricing, the risk factors which drive insurance quotes and how the premiums are calculated. This limits consumer awareness of options and can result in difficulties finding competitive insurance which is appropriate for their medical condition.
Responding to the FCA’s feedback, the Association of British Insurers has said it is open to considering other ways to help people understand and find suitable cover.
ABI Head of Conduct Regulation Raluca Boroianu-Omura said:
“The main purpose of travel insurance is to cover the cost of emergency medical treatment overseas, with insurers paying out medical claims worth around £200 million a year. This means a person’s medical history is particularly relevant when they are buying cover.”
Melissa Collett, Professional Standards Director at the Chartered Insurance Institute (CII) said:
“One in three people living in the UK are likely to get cancer at some point in their lives and it is absurd that this large group are prevented from travelling because they cannot get insurance or worse, forced to risk travelling without it. Many people living with cancer and those in remission live healthy and full lives and we should be doing all we can to support them in this.”
These findings from the Call for Input will now be used to inform the FCA’s wider work on insurance pricing. This was announced in their Business Plan for 2018/19 and it will be interesting to see how this work develops.