Insurance customers who are struggling financially because of coronavirus will be able to request payment holidays from next week – and some may also be able to move on to a cheaper deal or get a partial refund.
The Financial Conduct Authority (FCA) confirmed a package of temporary help for customers, which will come into force on Monday May 18 and be reviewed in the next three months.
It said customers’ risk profiles may have changed because of coronavirus and there may be scope to offer customers materially lower premiums.
The FCA said firms should consider whether there are other products they can offer which would better meet a customer’s needs and revise the cover accordingly.
For example, a motor insurance customer who has used their car very little during the lockdown may no longer need add-ons such as key cover, or they could be moved from fully comprehensive cover to third party fire and theft.
Fees for adjusting a customer’s policy would be waived.
This could result in a reduction in the monthly premium for customers paying by instalments or a partial refund of the premium for customers who have paid up front.
The regulator said customers who are struggling to afford their insurance or premium finance payments because of the impact of coronavirus should contact their insurer or insurance broker to discuss their options – and should not leave themselves uninsured.
Customers paying in instalments who are still struggling despite any reductions to their insurance payments should be able to get a payment holiday from their insurer, unless it is obviously not in the customer’s interests to do so, the FCA said.
This payment deferral should be granted for a period of between one and three months, although firms can go beyond three months.
The FCA said customers should be able to request a payment holiday at any point during the period up to August 18, while the window for requesting a payment deferral is open.
Where this is not considered appropriate, firms should offer customers other forms of relief, which could include accepting reduced repayments, or rescheduling the term, waiving missed or late payment fees or allowing a customer to amend their repayment date without any cost.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “Many firms in the insurance industry have already taken some of the actions we are suggesting here to support customers, such as premium reductions, discounts, waiving fees, and payment deferrals. The measures confirmed today will provide urgent support to those that need it.”
A spokeswoman for the Association of British Insurers (ABI) said: “As the FCA has recognised, since the start of the pandemic, insurers have taken wide-ranging action to support customers who may be facing financial difficulty.
“We have also set up industry-wide pledges in motor, home, travel, pet and business interruption insurance to assist customers during this difficult time.”
Support The Courier today.
The Courier is committed to delivering quality content to our communities and right now that’s more important than ever — which is why our key content is free. However, you can support us and access premium content by subscribing to The Courier from just £5.99 a month. Because Local Matters.Subscribe