FCA confirms measures to help insurance customers who may be suffering financial difficulties as a result of coronavirus

The FCA has confirmed a series of temporary measures to help customers who hold insurance and premium finance products and who may be in financial difficulty because of Covid-19. The measures come into force on Monday, 18 May 2020 and will be reviewed during the following three months and amended if appropriate in light of the developments in the health emergency situation.

The aim of the guidance is to prompt firms to help qualifying customers, where possible, to:

  • Reduce the impact of temporary financial distress.
  • Ensure that customers continue to have insurance that meets their demands and needs.


Firms the measures apply to

  • insurers
  • insurance intermediaries (including appointed representatives)
  • premium finance lenders that provide credit to fund the payment of insurance premiums in instalments
  • premium finance brokers that carry on regulated activities relating to credit granted for the purposes of financing insurance premiums in instalments
  • debt collectors  
  • other firms that may be involved in insurance arrangements and/or in relation to the provision of premium finance

The guidance applies to all non-investment insurance contracts, i.e. general insurance and protection contracts. It does not apply to re-insurance products.

The elements of the guidance that apply to insurers and insurance brokers only apply to eligible complainants as defined in DISP 2.7.3R. This includes natural persons and small business customers.

For premium finance credit agreements, this guidance is not intended to capture lending for business purposes.

In brief
The measures require firms to consider what options they can provide to customers including: 

  • Reassessing the risk profile of customers. This may have changed because of coronavirus and there may be scope to offer customers materially lower premiums.
  • Considering whether there are other products they can offer which would better meet the customer’s needs and revise the cover accordingly. For example, a motor insurance customer might no longer need associated add on cover such as key cover or could be moved from fully comprehensive cover to third party fire and theft.
  • Waiving cancellation and other fees associated with adjusting customers’ policies.

These actions could result in a reduction in the monthly premium for customers paying by instalments or a partial refund of the premium for customers who have paid up front.

Where amendments to the insurance cover do not help alleviate the temporary payment difficulties for customers paying their premium in instalments, then the FCA expects firms to grant customers a payment deferral unless it is obviously not in the customer’s interests to do so.

The payment deferral should be granted for a period of between 1 and 3 months, though firms can go beyond 3 months should they wish to do so, and it is in the customer’s interests.

Firms should make clear in their communications, including on their websites and apps, the different solutions available to customers, and encourage them to make contact if they are experiencing temporary financial difficulties.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

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Our View

For information.

Action Required By You

  • Firms affected by these measures should read the feedback statement and the finalised guidance;
  • Inform clients of their options and encourage them to make contact if they are experiencing temporary financial difficulty;
  • Contact your usual ATEB Consultant for further assistance or contact ATEB here.

About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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