The UK Financial Conduct Authority (FCA) has released new measures for insurers aimed at giving targeted relief to customers suffering from financial difficulty during the Covid-19 pandemic.
The regulator, which will introduce the new rules on 18 May, suggested insurers could do the following (among other things):
• Reassess the risk profile of customers, as this may have changed because of coronavirus and there may be scope to offer customers materially lower premiums.
• Waiving cancellation and other fees associated with adjusting customers’ policies.
• Consider whether there are other products they can offer to better meet the customer’s needs and revise coverage accordingly
To illustrate the last bullet point, the regulator gives the example of a motor insurance customer who might no longer need associated add ons, like coverage for their keys, or whether they could be moved from fully comprehensive cover to third party fire and theft to reduce costs.
Along with these suggestions, the regulator reiterated its expectation that insurers grant payment deferrals of between one and three months for customers that request them because of financial difficulty.
Where a payment deferral is not considered appropriate, it said firms should promptly offer other ways to provide temporary relief to the customer, including (but not be limited to) accepting reduced repayments, rescheduling the term, waiving missed or late payment fees and permitting a customer to amend their repayment date without any cost.
As well as urging insurers to advertise the options available to those struggling financially, the FCA said any interest rates on instalment payments should be reconsidered in line with the regulator’s expectation insurers treat customers fairly during the pandemic.
It noted in the announcement that many UK insurers are already taking steps to address the needs of these customers.