Financial watchdog shares plans to extend help for insurance customers

Posted: 16 October 2020 6:44 pm
News

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Insurance customers could see lower premiums or deferred payments.

A lifeline for insurance customers struggling because of coronavirus is set to continue, under plans from the Financial Conduct Authority (FCA).

This latest set of measures follows guidance published in August, in which the regulator set out its expectation that the industry would allow customers to defer payments. That guidance expires on 31 October 2020.

The new guidance is designed to protect customers who face financial difficulties because of the health and economic impact of coronavirus and applies to all firms offering insurance and premium finance.

The idea behind guidance is to prompt firms to help customers reduce the impact of financial distress and to offer them an insurance product that’s better suited to what they need. For example, a car insurance provider could temporarily offer lower monthly payments or interest rates. If the customer is no longer commuting to work as much as they were before the pandemic, they could offer them a more suitable product that reflects their actual usage and class of use.

The proposed guidance differs from previous guidance, which asked firms to proactively contact all customers who miss payments. However, insurers are asked to consider whether it’s appropriate to contact customers who have missed a payment and offer them support, and to consider their potential vulnerability.

As with previous guidance, firms would make different options clear to customers in their communications (including their websites and apps) and encourage them to get in contact if they are experiencing financial difficulties.

The FCA is currently accepting feedback from stakeholders under the new proposals until 5pm on Tuesday 20 October. If accepted, the new guidance will start on 1 November 2020.

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