You are here: Home - Insurance - News -

Insurance customers set for premium refunds and payment holidays

Written by:
The City watchdog has confirmed a package of measures to help insurance customers impacted financially as a result of coronavirus.

The Financial Conduct Authority (FCA) has implemented temporary measures to help insurance and premium finance product customers who may be struggling financially as a result of the health crisis.

From Monday 18 May, firms will need to consider whether other products are more suitable to meet a customer’s needs or whether cover needs to be revised.

As an example, a car insurance customer may no longer need a key cover add on, or they could be moved from a fully comprehensive to a third party fire and theft policy.

By re-assessing the risk profile of customers, there may be scope to offer them materially lower premiums, the FCA said.

They will also be required to waive cancellation and other fees associated with adjusting customers’ policies.

In taking these actions, the FCA said this could result in a reduction in monthly premiums for those paying in instalments, or a partial refund for customers who have paid upfront.

Where insurance cover changes don’t help alleviate payment difficulties, the FCA said it expects firms to grant customers a payment deferral of up to three months “unless it is obviously not in the customer’s interests to do so”.

Customers should also be able to request a payment deferral at any point up to 18 August 2020.

Where a payment holiday isn’t the best option for customers, firms should offer reduced repayments, or reschedule the term; waive missed or late payment fees; or allow a customer to amend their repayment date without any cost.

And, in a bid to treat customers fairly, firms will also need to review interest rates associated with instalments. Further, websites and apps should state what solutions are available to customers and encourage them to contact firms if they’re experiencing financial difficulties.

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “As with other areas of finance, we have worked quickly to draw up measures to help policyholders in financial difficulty because of coronavirus.

“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.”

The measures will be reviewed in the next three months.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Ford Money pulls all but one product for new customers

Ford Money has withdrawn all products from sale to new customers, except for its Flexible Cash ISA.