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18 May 2020, 01:18
New rules will now make it a requirement for insurance firms to offer their struggling customers payment holidays.
The coronavirus has had a significant impact on a huge chunk of the population, especially financially.
For those who are struggling with paying their insurance policies, some brand new rules which force firms to be more lenient with their customers will make all the difference.
The news rules will not only allow customers to have payment holidays of up to three months, but they'll also be able to amend their policies to lower cost ones without any penalties.
The Financial Conduct Authority has revealed that any British residents struggling financially as a result of COVID-19 will be eligible to a payment holiday of between one and three months from Monday, 18 May.
Firms have also been alerted they must allows those customers to change to cheaper policies or be allowed to remove any add ons to reduce the cost.
Sheldon Mills, who works for The FCA said: "As with other areas of finance, we have worked quickly to draw up measures to help policyholders in financial difficulty because of coronavirus.
"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."
If a customer is struggling and would like their insurance firm to take them into consideration for any changes or payment holidays, The FCA has stated they will be required to look into the following:
- Reassess the risk profiles, which may have changed because of coronavirus offering room to materially lower premiums
- Consider if cheaper products would be a better fit or add ons are still needed; for example key cover or moving from fully comprehensive cover to third party fire and theft
- Waiving cancellation and other fees associated with adjusting customers’ policies
The above factors could then mean that customers could benefit from a reduction in their monthly premiums or even a partial refund for any who paid upfront.
Lee Griffin, the Chief Executive of GoCompare revealed: "Insurance, and car premiums particularly, can be a significant monthly outgoing for many people and millions of households are facing a period of reduced income as a result of the current pandemic.
"These steps will hopefully ensure that these customers can reduce their outgoings while remaining insured and protected."