The Financial Conduct Authority (FCA) has today announced a proposal to extend the temporary relief measures to support insurance customers facing financial difficulties due to the COVID-19 pandemic. This follows the original implementation of these measures on Monday, May 18, which the FCA committed to reviewing after three months.
The FCA has outlined that businesses should continue to consider the options they can offer customers and that, where payment deferral is not in the best interests of the customer, alternative measures should be taken. These measures may include premium reductions due to risk profile changes, or the option of an alternative product which better matches the requirements of the customer, as well as waiving fees associated with cover alterations.
Where insurance cover amendments do not alleviate temporary payment difficulties, the FCA advises that firms will be expected to grant a payment deferral of between one and three months, if this is in the customer’s interest. Customers must not leave themselves uninsured and their insurance cover must match their requirements. The FCA recommends anyone struggling to afford their insurance or premium finance payments due to COVID-19 to contact their insurer or broker to discuss the options available to them.
Regarding the proposal to extend these temporary relief measures until October 31, 2020, the FCA is seeking comments by 5pm on Tuesday, July 28.
Responding to this FCA guidance, Keith Richards, the MD of engagement of the Chartered Insurance Institute (CII), has said that with so many facing either income reduction or the complete stopping of their income, any action an insurer can take to reduce the financial burden facing households should be championed.
“Without being prescriptive as to what actions firms have to take, but by giving them the flexibility to consider all options, the FCA has allowed insurers the opportunity to find solutions that work best for customers and themselves, rather than attempt a one size fits all policy,” he said. “This versatility in the face of an unprecedented situation will mean firms can respond quickly to the needs of the individual and should be commended.”
