FCA Finalizes Guidance to Extend Measures for Insurers Amid COVID
FCA finalized the guidance extending measures to help customers that hold insurance and premium finance products and are in temporary financial difficulty because of COVID-19 crisis. The guidance sets out the expectations for firms when considering the fair treatment of existing customers in financial difficulty, due to circumstances arising from the pandemic. The guidance comes into effect on August 11, 2020 and will remain in place for a further three months, until October 31, 2020. FCA has also published a feedback statement (FS20/13) that summarizes the feedback received to the guidance that was proposed in July 2020. During the short comment period, stakeholders expressed support for the proposal.
On May 14, 2020, FCA had published guidance setting out expectations for insurance firms when considering the fair treatment of existing customers in financial difficulty, due to circumstances arising from COVID-19 pandemic. FCA proposed an update to the guidance on July 24, 2020. The guidance specifies that firms should continue to consider what options they can offer customers. Where payment deferral is not in the best interest, the measures that could be taken may include granting premium reductions due to changes in risk profile, offering an alternative product that would better meet the customer needs, and waiving fees associated with altering cover. Where amendments to the insurance cover do not help alleviate the customer’s temporary payment difficulties, firms will be expected to grant a payment deferral of between one and three months, unless it is not in the customer’s interest to do so. It is important that customers do not leave themselves uninsured and that their insurance cover meets their demands and needs. Those struggling to afford their insurance or premium finance payments because of the impact of the pandemic should contact their insurer or insurance broker to discuss their options.
The guidance applies to regulated firms operating in the insurance and premium finance markets. This includes insurers, insurance intermediaries (including appointed representatives), premium finance lenders that provide credit to fund the payment of insurance premiums in installments, premium finance brokers that carry on regulated activities relating to credit granted for the purposes of financing insurance premiums in installments, debt collectors, and other firms that may be involved in insurance arrangements and/or the provision of premium finance. This guidance applies to all non-investment insurance contracts—that is, general insurance and protection contracts. It does not apply to re-insurance products.
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Effective Date: August 11, 2020
Keywords: Europe, UK, Insurance, COVID-19, Premium Finance Firms, Payment Deferrals, Guideline, FCA
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