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.
Effective Date: August 11, 2020
Keywords: Europe, UK, Insurance, COVID-19, Premium Finance Firms, Payment Deferrals, Guideline, FCA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).