The FCA have confirmed a series of temporary measures to help insurance customers who may be suffering financial difficulty as a result of COVID-19. The announcement targetted at insurers encourages them to make clear their communications the different options available to customers and encouraging them to make contact if they are experiencing temporary financial hardship.
The measures include:
- Reassessing the risk profile of customers. This may have changed because of coronavirus and there may be scope to offer customers materially lower premiums.
- Considering whether there are other products they can offer which would better meet the customer’s needs and revise the cover accordingly. For example, a motor insurance customer might no longer need associated add on cover such as key cover or could be moved from fully comprehensive cover to third party fire and theft.
- Waiving cancellation and other fees associated with adjusting customers’ policies.
Where such measures do not help alleviate the temporary difficulties, the FCA expects insurers to grant customers a payment deferral unless this is not in the customers best interest to do so.
The payment deferral should be granted for a period of between 1 and 3 months, though firms can go beyond 3 months should they wish to do so, and it is in the customer’s interests. Customers should be able to request a payment deferral at any point during the period up to 18 August 2020 while the window for requesting a payment deferral is open.
Where a payment deferral is not considered appropriate, firms should promptly offer other ways to provide temporary relief to the customer. These could potentially include (but not be limited to):
- accepting reduced repayments, or rescheduling the term
- waiving missed or late payment fees
- permitting a customer to amend their repayment date without any cost