The Australian Securities and Investments Commission (ASIC) has written to insurers to set out its expectations on how they should assist consumers experiencing financial difficulties during the coronavirus pandemic.

The regulator says that includes implementing the updated Insurance Council of Australia (ICA) Code of Practice, which is being phased in this year.

“Now is a time when many more, if not most of the general insurance industry’s customers are in a vulnerable position and may be suffering financial hardship and require additional support,” ASIC Senior Executive Leader – Insurers Emma Curtis writes.

“A commitment to meet the additional consumer protections contained in the 2020 Code, particularly those related to vulnerability and financial hardship, is important at this time.”

ASIC says insurers should consider whether it is fair to require consumers to “opt in” or make a request for COVID-19 assistance, with vulnerable customers under stress better able to benefit from proactive contact and automatic cover extensions.

“If an insurer relies on consumers to contact them to discuss options for retaining their cover, this can result in inconsistent and unfair outcomes for policyholders,” Ms Curtis says.

Insurers should not automatically cancel or lapse policies for non-payment but continue cover for a reasonable period while working through options, ASIC says.

On travel, it notes people overseas who are delayed or unable to return to Australia will be particularly vulnerable, and insurers should be “cognisant of this” when considering requests to extend cover taken out prior to the known event.

“Insurers must ensure that their staff do not, either intentionally or inadvertently, discourage consumers from making claims,” Ms Curtis says.

“This will be particularly important for travel insurance claims where there are differences between policies and insurers about when the covid pandemic became a known event.”

ASIC points to Section 7.7 of the 2014 General Insurance Code Of Practice, which offers fast-tracking of claims and advance payments when someone is in urgent financial need.

The regulator says insurers should be flexible in the treatment of consumers whose situations have changed due to the pandemic, and it expects clear communication about COVID-19 impacts on policies.

“Any new and significant pandemic-related exclusions on policy renewal should be clearly disclosed, and these policies should not be offered to people who are unlikely to be able to claim under them,” Ms Curtis says.

ASIC is not currently collecting data on claims connected to the pandemic, saying it is mindful of demands on insurers, but expects it will do so as the operational impact of the event subsides.

“Insurers should, at a minimum, identify claims under a general insurance product where the loss event is connected to the effects of the covid pandemic,” Ms Curtis says.

“We will engage with the ICA and insurers shortly to discuss our likely data requirements.”

ASIC has also sent a similar letter on its expectations to life insurers, highlighting that they should act in a professional manner, in line with the duty of utmost good faith.