Insurers expected to refund premiums or suspend monthly payments
As part of a new package of measures, the Financial Conduct Authority (FCA), has set out its expectations that insurance firms should consider whether their products still offer value to customers in the current crisis and whether they can do more for those suffering financially.
The regulator said coronavirus may be having a temporary impact on the extent to which consumers can use and access benefits as part of their insurance products.
As an example, boiler cover insurers may not be able to offer an annual service that is part of many policies. Similarly, liability insurance may temporarily not be relevant for some businesses such as hairdressers, bars and restaurants that have been forced to close.
The FCA said it expects insurers to assess the value of insurance products and “consider appropriate action”.
This may include changing how benefits are delivered, refunding some premiums or suspending monthly payments for a period of time. It added that it proposes to give insurers up to six months to assess this.
Coronavirus may also be making it harder for people to afford their insurance and premium finance payments and so the FCA is setting expectations for firms to alleviate temporary financial distress while maintaining insurance cover that meets their needs.
For instance, this could include giving customers premium payment holidays (between one and three months), waiving administration and cancellation fees, relaxing charges or interest incurred for missed payment, extending cooling off periods and partly refunding premium payments where the whole amount has been paid upfront.
Customers who are struggling to afford their insurance or premium finance payments as a result of the impact of coronavirus should contact their insurer to discuss options, it added.
The consultation on the proposals closes on 5 May and if confirmed, the measures to help customers in temporary financial distress will apply shortly after. They will be subject to review in three months’ time.
Christopher Woolard, interim chief executive of the FCA, said: “The current emergency has altered the value of some insurance products and we believe that insurers should be looking at whether their products still offer value. Firms should also look at how they can help customers who may be experiencing financial difficulties as a result of the virus.
“Many insurers are already taking some kind of action to assist their customers and we want to see a degree of consistency for consumers. Today’s proposed guidance and statement aims to make our expectations clear to all firms in the insurance market and provide future certainty.”