Increasing amounts of data and the impact of the pandemic are making it ‘increasingly difficult’ for insurance seekers to obtain cover, adds committee chair

Despite Brits starting to book holidays with more confidence following the lifting of lockdown restrictions last month, a general lack of understanding about the long-term impacts of Covid-19 is “creating great uncertainty in the insurance market”, according to Caroline Barr, chair of the British Insurance Brokers’ Association’s (Biba) access to insurance committee.

One area that Biba is “really concerned” about is if people are “keeping their fingers crossed that nothing is going to go wrong”, rather than seeking appropriate cover when buying a travel insurance policy - a more prominent issue now that travel enquiries are rising in the association’s travel directory.

Speaking exclusively to Insurance Times, Barr said: “With the amount of big data that’s out there, it’s getting increasingly difficult for [insurance seekers] with certain conditions [to obtain travel insurance] and with Covid, there’s also an impact with the lack of understanding about the [long-term ramifications] of the disease.”

However, if suitable policies are provided, “what insurance gives to people is peace of mind. It means they can fly out, or cruise out, knowing that if the worst happens – their worst fear – they will be covered and somebody is going to help them get out of that situation”, she added.

FCA requirements 

Effective from 26 April 2021, the FCA implemented a new rule which requires insurance providers selling travel cover to signpost customers with more serious medical conditions, under certain circumstances, to a travel medical firm directory.

These circumstances include when a provider:

  • Declines or otherwise does not offer a consumer quotation.
  • Cancels a consumer’s policy.
  • Offers a policy with a medical condition exclusion that cannot be removed.
  • Offers a policy with a medical condition premium loading of £100 or more.
  • Offers a policy where the medical condition premium is not known.

As a result of Biba developing its online Find Insurance Service - which was introduced in 2012 and directs customers to Biba member brokers - the FCA found that the trade association’s Travel Medical Insurance Directory met its criteria for a ‘medical cover firm directory’. The service was then listed on the FCA’s website as a key source on 27 January 2021 in preparation for the launch of the regulator’s signposting requirements.

The Money and Pensions Service (MaPS) travel directory is also listed by the FCA.

The purpose of Biba’s directory is to provide a “simple solution” for insurers to “easily fulfil” the latest regulatory signposting obligation, as well as helping consumers to “better find the essential specialist travel insurance they need”, explained Biba executive director Graeme Trudgill.

It also supports the FCA’s expectations around consumer duty and pricing practices, as “rather than excessive charging or just saying no, signposting can demonstrate that firms are doing what is necessary to act fairly towards their customers”, added Barr.

Broker ‘dating agency’

In addition to the online directory, Biba also operates its Find Insurance Service via an outsourced call centre - this opened in 2006 under the name of ‘Find a Broker Service’ and acts like a “dating agency” in the sense of matching a broker with a consumer to provide the best suited cover.

“People think insurance is a quite simple product, and it can be, [but] it isn’t always going to be the best value product,” said Barr. “Brokers are much better at matching the product to the real risks that you have in your world.”

Speaking to a broker can also support customers from a security perspective because “in a world of increasing scams and frauds”, it is important to know ”that you are actually insured rather than just handing your money over to a scammer”, Barr added.

Further highlighting the importance behind the role of a broker, Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ASCO), said: “There are plenty of horror stories about people becoming ill abroad and finding themselves unprotected because their travel policy did not cover them for pre-existing medical conditions.

“While there is an onus on consumers to make sure they obtain the right cover for them, insurers must do more to simplify the quote and buy journey and make sure it is transparent for consumers.

”There is additionally a good opportunity here for brokers to provide sensible and practical advice to consumers with specialist needs and help to find the best deal.

”Aggregator sites for travel insurance are almost wholly price focused and thus not always the best route for consumers who need appropriate cover.”

Biba’s signposting journey, however, really began to flourish in 2010 when charity Age UK started making representations to the UK government.

One of the charity’s requests stated that there should be a ban on differential insurance pricing based on age because many older customers were finding it difficult to access motor or travel insurance due to maximum age cutoffs.

To improve access to insurance therefore, a signposting agreement was launched by Theresa May in April 2012 - with the support of Biba and the ABI - titled: Transparency and Access in Motor and Travel Insurance for Older People, an agreement on age and insurance.

Sharing Biba’s intentions behind the intervention, Trudgill said: “Rather than ban pricing on age, which insurers would probably find problematic, we came in the middle between Age UK and the insurers and said ’look, the brokers have got a solution – let’s have a voluntary signposting agreement here’.”

Since 2012, Biba has passed over 800,000 enquiries to brokers that specialise in cover for older people. Based on this success, Trudgill wants signposting to be implemented more widely across the insurance sector. “This proves that signposting works, so we want more of it,” he said.

Supporting armed forces

One signposting case study that is a fond memory for the association is back in 2015, when a Biba broker helped British WWII veterans return to Arnhem in the Netherlands to celebrate Victory in Europe (VE) Day. The oldest veteran to travel was aged 97, alongside an additional 100 veterans aged 90 or above - specialist travel insurance was therefore essential.

Insurer Free Spirit was able to offer full insurance cover to a total of 306 veterans, committee members, carers, drivers, medical support team members and guests – the whole travelling group reportedly returned safely with not a single claim against the policy.

Discussing the importance of signposting to meet specialist needs in deeper detail, Trudgill said: “If you’re on a military base, sometimes your motor insurance might exclude use [there], so there’s all sorts of complications for the armed forces where our specialist members can really help people.

“Another good example is if an individual is suddenly posted abroad and they may be away for say three years in Afghanistan or wherever, and their no claims bonus would automatically expire after two years.”

Biba has therefore made a commitment to help armed forces personnel and their families access brokers who will agree to accept a no claims bonus for up to three years.

The association’s access to insurance committee is also looking to work more closely with the Ministry of Defence on the Armed Forces Covenant commitment to abolish admin fees if a customer wants to change their address halfway through a car insurance policy, for example.

Barr highlighted that insurance for this market is particularly sticky as “there’s a premium you pay because you’re in the armed forces and you have a certain lifestyle attached to it”.

Barr added that the committee will work on expanding the reach of signposting in the insurance industry “as more and more issues come to light where people are struggling to access insurance”.

Trudgill continued: “I’d say it’s a win-win for everybody because the customer wins – they get cover, the industry overall – [its] reputation improves because we’ve solved the problem and a broker gets the business, so they have a new customer.

“It’s just a win-win-win, so why wouldn’t we do as much signposting as possible?”