FCA Proposes Extension on Insurance Premium Payment Deferrals

The Financial Conduct Authority has proposed extending the deferment of insurance premiums to provide financial relief to those that need it during the coronavirus pandemic.

After the global lockdowns commenced and the pandemic’s unshakable grasp was felt, insurance premiums were halted for a temporary period to provide customers with some coronavirus relief. The temporary deferment of insurance premiums began 18 May 2020 and was set for three months as a safeguard for individuals who could potentially lose jobs or become ill. 

Insurers, insurance intermediaries and other firms, including debt collectors and finance lenders, are involved in the FCA’s proposal. The FCA aims to guide insurance firms to help customers struggling at this time to be treated fairly. The purpose of the insurance deferments is to decrease financial stress and guarantee that customers are appropriately insured in a way that fits their needs.

The insurance premium postponement rules are nearing termination at the end of August, but the FCA is urging insurance firms to extend the delay of payments until 31 October 2020. Insurance firms have until 28 July 2020 to respond to the FCA’s proposal.

Insurance companies can temporarily decrease the cost of premiums,and customers who are struggling can take this time to choose policies that better fit their lifestyle during the pandemic.

For example, an individual who is working from home for the foreseeable future might want to reevaluate having full-coverage insurance if they feel that is no longer necessary. 

The FCA says lenders should do their best to provide care that is in the best interest of customers right now. 

Insurance premiums can be reduced and lenders can forgo cancellation fees and excess charges for missed payments.

If some policyholders have paid insurance premiums in advance and they have overpaid, insurers can refund them the overages.

If deferment is not in the best interest of an individual, other options, such as payment reductions, can be applied.

If an insurance firm has gone through all options to help a customer who is struggling with payment difficulties, the firm is expected to allocate a one- to three-month payment extension.

“It is important that customers don’t leave themselves uninsured, and that their insurance cover meets their demands and needs,” the FCA’s updated insurance premium guidance states. “Those struggling to afford their insurance or premium finance payments because of the impact of coronavirus should contact their insurer or insurance broker to discuss their options.”

Furthermore, the FCA is seeking feedback from consumers.

It is the mission of the FCA to take rapid action to guide consumers from harm and allow them this time to recover from financial burdens. The proposed extension will be until 31 October, and some parts of the proposal may last longer.

The FCA is gladly receiving comments at this time. The FCA is accepting thoughts and comments about parts of the coronavirus relief guidance becoming permanent and they are seeking contributions from consumers about the guidance for insurance forms they plan to evaluate later this year.

Reviewing the guidance now with the help of consumers is important for the treatment of policyholders. Insurance firms are expected to provide thoughtful consideration to everyone affected by the pandemic.

If you would like to contribute thoughts and comments, send them to Sean.Cafferky@fca.org.uk and Ruby.Adesuyi@fca.org.uk by 5 p.m. 28 July 2020. 

Do you think the parts of the FCA’s guidance should be made permanent? If you’ve been affected by insurance premiums during the pandemic, are you going to submit your comments to the FCA? Let us know in the comments.

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