At the beginning of May, the Financial Conduct Authority (FCA) revealed that it would be seeking legal clarity on business interruption insurance and that it is proposing a series of measures to support consumers and businesses facing problems due to the coronavirus pandemic. Now, the FCA has confirmed a series of measures to help insurance customers who may be facing financial difficulty due to the coronavirus (COVID-19).
The measures announced today will come into force on Monday, May 18, and will be reviewed in the next three months. Following a short consultation, these measures will require firms to consider what options they can provide to customers including:
These actions could result in a reduction of a customer’s monthly premium, or a partial refund of the premium of customers who have paid upfront. In cases where amendments to the insurance cover do not alleviate the temporary payment difficulties faced by customers paying their premiums in instalments, the FCA has outlined its expectation that firms grant customers a payment deferral except where it is not in the customer’s interests to do so.
The FCA said that this payment deferral is to be granted for a period of between one and three months, though firms can go beyond three months should they wish to, and where this is to the customer’s benefit. In situations where a payment deferral is not considered appropriate, the FCA has outlined a series of ways in which companies should offer alternative means of providing temporary relief to their customers including:
The FCA also expects firms to consider reviewing any interest rates associated with instalments to ensure that these are in-line with the obligation to treat customers fairly in these exceptional circumstances. Firms should make it clear through all channels of communication, the various solutions which are available to customers and encourage them to make contact if they are facing temporary financial difficulties. In turn, customers who are struggling to afford their insurance or premium finance payments due to coronavirus should contact their insurer or broker to discuss their options and to ensure they are not left uninsured.
The interim executive director of strategy and competition at the FCA, Sheldon Mills noted that the association has worked quickly to draw up these measures due to the pressing nature of the financial difficulties facing policyholders due to the coronavirus.
“The majority of respondents expressed support for the proposals we published at the start of May,” he 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.”
