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.
Effective Date: August 11, 2020
Keywords: Europe, UK, Insurance, COVID-19, Premium Finance Firms, Payment Deferrals, Guideline, FCA
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Next ArticleACPR Releases Version 4.0.0 of SFRDP Taxonomy
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
DNB Publishes Multiple Reporting Updates for Banks
DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.
NBB Sets Out Climate Risk Expectations, Issues Reporting Updates
The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting
EBA Updates Address Securitization Standards and DGS Guidelines
The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.
FSB Publishes Letter to G20, Sets Out Work Priorities for 2023
The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023
ISSB Standards May Become Effective from January 2024
The International Organization of Securities Commissions (IOSCO) welcomed the confirmation statement by the International Sustainability Standards Board (ISSB) setting out its progress in the development of its first sustainability-related corporate disclosure standards.