Insurance providers cannot exclude COVID-19 from health policies, the financial sector regulator warned on Friday.  

In a circular to insurance firms, the Malta Financial Services Authority said it was monitoring developments in relation to the spread of coronavirus and its impacts on the financial sector. 

For insurance policies which cover medical conditions, the MFSA said, a blanket exclusion for claims arising out of COVID-19 is not acceptable.

The coverage for medical treatment should be that which is laid out in the parameters of the original policy, the MFSA said. 

On Friday Malta recorded 11 new cases including the island's first patient that had developed serious health complications as a result of contracting the virus.  

The financial services watchdog said that changes in the terms and conditions relating to any policies issued cannot apply retrospectively or mid-term during the policy period.

Where policies offer cover for consequential loss, insurance providers are expected to clarify what would be covered in case of claims arising from COVID-19, the MFSA said. 

While it would be acceptable for insurance providers to put limits on new policies in the case of claims arising from COVID-19, any existing policies should not be subject to such limits, it said.

As for travel policies, the MFSA said it understands that cancellation costs covered are subject to the policy holders’ obligation to mitigate their loss.

The watchdog also reminded providers that they were obliged to provide clients with the information necessary to make informed decisions with respect to all types of policies sold. In this regard, insurance firms should assess whether they need to change their proposal forms/ underwriting decisions to cater for the COVID-19 pandemic. 

"For example, for new policies, insurance undertakings may wish to start asking whether the client has been in a high-risk territory,” the circular reads.