You are here: Home - Insurance - News -

Insurers expected to refund premiums or suspend monthly payments

0
Written by:
01/05/2020
The City watchdog has told insurers it expects them to support customers impacted financially by coronavirus, including a refund of premiums or suspension of 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.”

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.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week