FCA Handbook - ICOBS 6A.4 Travel insurance and medical conditions

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ICOBS 6A.4 Travel insurance and medical conditions

Application

This section applies in relation to a travel insurance policy, which is not:

(1)
a group policy; or
(2)
a policy entered into by a commercial customer.

Purpose

The purpose of this section is to improve access for consumers to travel insurance policies that include cover for more serious medical conditions.

Medical cover firm directory

(1)
A firm must include the details of a medical cover firm directory on the page of its website where it markets travel insurance policies.
(2)
The information required by (1) must:
1. (a)
  be provided in a prominent, clear and accurate manner; and
2. (b)
  include the contact details of the medical cover firm directory, including its telephone number and a link to its website;
(3)
The obligations in (1) and (2) apply 30 calendar days from the date on which the firm becomes aware (or ought reasonably to have become aware) of a publicly available directory that meets the requirements of a medical cover firm directory.

The FCA’s website contains a list of those directories which it considers to be medical cover firm directories.

Additional pre-contract information for the consumer

(1)
Where one or more circumstances set out in ICOBS 6A.4.6R applies, the firm that is responsible for communicating with the consumer under this sourcebook, must also communicate to the consumer:
1. (a)
  the contact details, including telephone number and website, of the medical cover firm directory;
2. (b)
  the purpose of the medical cover firm directory; and
3. (c)
  the potential benefits of accessing the medical cover firm directory and any other relevant considerations.
(2)
The firm must communicate the information in (1):
1. (a)
  in a manner that is prominent, clear and accurate; and
2. (b)
  in accordance with ICOBS 4.1A.

The circumstances

The circumstances for the purposes of ICOBS 6A.4.5R are where a firm:

(1)
declines, or otherwise does not offer, a consumer a quotation due (wholly or partly) to a medical condition;
(2)
cancels a consumer’s policy due (wholly or partly) to a medical condition;
(3)
offers a policy with a medical condition exclusion which cannot be removed from the policy;
(4)
offers a policy with a medical condition premium of the amount (or more) as set out in, or calculated in accordance with, ICOBS 6A.4.6AR; and/or
(5)
offers a policy in respect of which the medical condition premium is not known.

(1)
The medical condition premium amount referred to in ICOBS 6A.4.6R(4) is £200, or the amount calculated in accordance with (2) below, (or more).
(2)
The medical condition premium amount of £200 in (1) must be adjusted at the end of every 5-year period based on the ratio difference in the CPI. The adjusted medical condition premium amount must be calculated using the following formula:
1. (a)
2. (b)
  rounded down to the nearest pound sterling (£).
(3)
In (2)(a):
1. (a)
  £200 is the base figure (and it will always be this amount);
2. (b)
  135.4 is the January 2025 CPI (and it will always be this); and
3. (c)
  Y is the CPI of the ‘last January of the relevant 5-year period’.
[Note: The CPI is published on the Office for National Statistics website, available at: https://www.ons.gov.uk/economy/inflationandpriceindices]

(4)

In (2) and (3)(c):

(a)
a 5-year period starts in January and ends the January 5 years later;
(b)
the first relevant 5-year period for the purposes of the adjustment referred to in (2) is the period from January 2025 to January 2030; and
(c)
the last Januarys of the relevant 5-year periods are set out in the table below:

Relevant 5-year period for purposes of the calculation in (2)	Last January of the relevant 5-year period (Y)
January 2025 to January 2030	January 2030
January 2030 to January 2035	January 2035
January 2035 to January 2040	January 2040
Continued for every subsequent 5-year period.

Content of communication

(1)
When describing the purpose and potential benefits of accessing the medical cover firm directory, the communication provided to consumers pursuant to ICOBS 6A.4.5R should:
1. (a)
  tell the consumer why they are receiving the communication;
2. (b)
  taken as a whole, not discourage the consumer from using the directory; and
3. (c)
  otherwise be the result of careful consideration by the firm of consumer needs and expectations in light of the requirements of relevant principles and rules, including Principles 6, 7 and 8.
(2)
An example of a relevant consideration (referred to in ICOBS 6A.4.5R(1)(c)) is where multiple consumers have applied for a joint travel insurance policy from the firm and should consider the consequences of purchasing separate travel insurance policies.

Exception: multiple policies

A firm need not comply with ICOBS 6A.4.5R where it is contemporaneously able to communicate an offer to a consumer of a travel insurance policy in respect of which none of the circumstances set out in ICOBS 6A.4.6R apply.

Exception: consumer has already accessed the medical cover firm directory

A firm need not comply with ICOBS 6A.4.5R where all the following conditions are met:

(1)
the firm is listed on a medical cover firm directory;
(2)
the firm is aware that the consumer has already accessed the medical cover firm directory in respect of the same risk; and
(3)
only ICOBS 6A.4.6R (4) applies.

A firm must not rely on the exception in ICOBS 6A.4.8R or ICOBS 6A.4.9R where it would still be in the consumer’s best interests to provide the communication under ICOBS 6A.4.5R.

An example of where it may be in the consumer’s best interests to provide the communication is where the consumer has expressed dissatisfaction to the firm with the quote provided.

(1)
Whether a firm has responsibility for communicating with the consumer under this section will depend on the rules in this sourcebook applicable to the relevant circumstances, and the language of relevant provisions in this section should be construed accordingly. See, for example, ICOBS 5.1.3CR (Packaged bank accounts), ICOBS 6.-1R (Producing and providing product information), ICOBS 6.1 (Providing product information to customers) and ICOBS 6.5 (Renewals).
(2)
Guidance on the application of these requirements to an insurer that is an incoming firm can be found at ICOBS 1 Annex 1 (Part 2) 5.1R.
(3)
Firms with appointed representatives are reminded that the effect of s39(4) of the Act is that where the appointed representative carries out the relevant activity, the firm must ensure that the appointed representative complies with the relevant provision (see SUP 12.3.1G).

Assessment of medical condition risk

(1)
Firms should assess the risk associated with medical conditions and calculate medical condition premiums by reference to reliable information that is relevant to the assessment of the risk. Firms which do not do this may communicate unclear, unfair or misleading price information to consumers and so risk breaching Principles 2, 6 and/or 7, and ICOBS 2.2.2R and/or ICOBS 2.5-1R. Firms also need to consider their obligations under the Equality Act 2010.
(2)
Firms are also reminded of their obligations in PROD 4.2 or 4.3 to identify and distribute travel insurance policies to the target market.
(3)
Prior to a firm offering a policy with a very high medical condition premium, the firm should take all reasonable steps to consider whether:
1. (a)
  the nature of the medical screening or assessment process is insufficient to provide reliable information which is relevant to the assessment of the risk associated with the particular medical condition;
2. (b)
  the high premium is intended to indicate an unwillingness to accept the risk by the insurer; or
3. (c)
  the high premium is due to the medical condition falling outside of the insurer’s risk appetite or the target market for the product.
(4)
Where this is the case, offering a quote may mislead the consumer and/or result in them not being treated honestly, fairly and professionally in their best interests. A firm should consider instead whether it would be more appropriate not to offer a quote for the risk, explain the reason/s why not to the consumer and provide them with the details of the medical cover firm directory under ICOBS 6A.4.5R.