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18 May 2020
The UK’s Financial Conduct Authority (FCA) has outlined temporary measures for insurers to help their customers experiencing financial difficulty due to COVID-19, including premium reductions, discounts, waiving fees, and payment deferrals.
It says firms should make clear in their communications, including on their websites and apps, different solutions available to customers, and encourage them to make contact if they are experiencing temporary financial difficulties.
“Many firms in the insurance industry have already taken some of the actions we are suggesting here to support customers,” Interim Executive Director of Strategy and Competition Sheldon Mills said.
The regulator says firms should reassess the risk profile of customers, which may have changed because of coronavirus, and there may be scope to offer customers “materially lower” premiums.
Insurers should also consider 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 could be moved from fully comprehensive cover to third party fire and theft.
Firms should also waive cancellation and other fees associated with policy changes and interest rates must be fair.
“These actions 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 FCA says.
Customers should be able to request a payment deferral at any point until August 18, or firms should promptly offer alternative ways to provide temporary relief such as accepting reduced repayments, or rescheduling the term, waiving missed or late payment fees and permitting a customer to amend their repayment date without any cost.
The measures, which come into force today, will be reviewed in the next three months and may be revised.