Hard-pressed households set for lower bills as watchdog asks insurers to grant payment holidays and cut premiums
- Insurers asked to offer three month payment holidays from Monday next week
- They will also have to offer more suitable policies and waive fees attached
- Policyholders will have until the 18th of August to apply for a payment holiday
Insurance customers in financial difficulty may soon get some relief as the City watchdog today asked insurers to grant payment holidays from Monday.
The Financial Conduct Authority today confirmed a series of temporary measures to help insurance customers who may have seen their incomes hit by the coronavirus crisis.
As of Monday next week, the watchdog will be asking insurance companies to reassess the risk profile of their customers and offer a lower premium if this has changed, for example, if they are using their insured vehicle less.
It will also ask insurers to move policyholders onto more appropriate cover if they qualify, and waive any fees that may come with this.
Insurers will also be asked to move customers onto more appropriate policies and waive fees
But if a customer is in trouble and a different policy won’t help, the FCA said it expects insurers to offer payment holidays for those paying in installments.
These ‘payment deferrals’ will be granted for up to three months, similar to the mortgage holidays that banks and building societies are currently offering homeowners.
If you’re a customer, you’ll be able to request a payment deferral at any point before 18 August – but the FCA says it will keep the scheme under review in case it needs to be extended.
While the customers will still be insured, the insurance will not be free for those three months and the provider will likely ask for you to pay it back at a later date.
Where a payment deferral is not considered appropriate, the FCA said that firms should ‘promptly offer other ways to provide temporary relief’ to the customer.
This could include accepting reduced payments, rescheduling the term or waiving missed or late payment fees, the watchdog suggested.
The FCA’s said: ‘Many firms in the insurance industry have already taken some of the actions we are suggesting here to support customers, such as premium reductions, discounts, waiving fees, and payment deferrals.
‘The measures confirmed today will provide urgent support to those that need it.’
The Association of British Insurers has been approached for comment.