FCA to launch measures to help consumers with insurance

The Financial Conduct Authority (FCA) has announced it is proposing a series of measures to support both consumers who hold insurance products and who are facing other issues as a result of coronavirus (Covid-19). The package of measures sets out the FCA’s expectations that insurance firms should consider whether their products still offer value to customers in the current situation and whether they can be doing more for those suffering a financial impact because of coronavirus.

The additional guidance proposals are designed to provide consumers with temporary support in the light of the exceptional circumstances arising from coronavirus and follow steps the FCA has taken in other markets such as credit cards, overdrafts and personal loans.

This package of measures sets out how the FCA expects insurance firms to:

• Ensure products continue to offer value and are appropriate for customers taking into account the impact of coronavirus taking into account the firm’s ability to deliver the benefits promised.
• Help individual customers who may be finding it difficult to pay their insurance premiums or meet their premium finance payments as a result of coronavirus.

Coronavirus may be having a temporary impact on the extent to which consumers can use and access benefits from their insurance products. For example, boiler cover insurers may not be able to offer an annual service that is part of many policies.

The FCA expects insurers to assess the value of their insurance products to customers during this period and to consider appropriate action. This might include changing how benefits are delivered, refunding some premiums or suspending monthly payments for a certain period of time.  The FCA proposes to give insurers up to six months to assess this so that it can take into account effects of coronavirus in a more rounded manner.

Coronavirus may also be making it harder for people to afford their insurance and premium finance payments. The FCA is setting expectations for firms to take steps to help customers alleviate temporary financial distress and maintain insurance cover that meets their demands and needs.  Insurers will have a range of options they can consider appropriate to the policy. This might include giving customers premium payment holidays, waiving administration and cancelation 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 up front.

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.

The FCA is seeking comments on its proposal to help customers in temporary financial distress by 5 May and on those to assess the value of insurance products by 15 May. If confirmed, the measures to help customers in temporary financial distress will apply shortly after 5 May and those for value assessments shortly after 15 May. Once implemented the FCA will review this guidance in 3 months in the light of developments regarding coronavirus and may revise the guidance if appropriate.