Refunds, payment holidays and waived fees all part of a package of measures ordered by the FCA
Insurers have been told to offer drivers help including lower premiums and refunds during the coronavirus outbreak by the financial watchdog.
The Financial Conduct Authority (FCA) is also asking insurers to waive fees on insurance deals and let customers take payment holidays if they need them.
The regulator also wants insurers to judge if customers no longer need add-on cover such as key insurance, and whether these could be cancelled and money refunded.
The FCA is worried that many policyholders may be in financial trouble due to the outbreak, and wants insurers to be sensitive and lenient to this.
Sheldon Mills, interim executive director of strategy and competition at the FCA, says: “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.”
Insurers will have to reassess the chance of customers having expensive claims, and offer them “materially lower premiums” if they now pose less risk due to the lockdown.
For example, cars are less likely to be crashed if they are driven less, and properties at a lower risk of being burgled if the homeowner is almost always in.
When will this take effect?
The measures will come in on 18 May and be reviewed over the next three months.
Scott Mowbray, co-founder of consumer champions Snoop, says: “They need to automatically reimburse premiums ASAP, not just sit on abnormal profits whilst households and small businesses suffer. The big banks got on the front foot with forbearance during this crisis, while most insurers just appear to be looking the other way. That needs to change.”
Last month car insurers began to refund customers or offer them cheaper premiums because the coronavirus lockdown means fewer claims are being made.
The largest motor insurer, Admiral, announced it would give a £25 refund to car and van drivers because fewer people are using the roads.
The payment will be automatically given to all customers for each car and van they had with Admiral as of 20 April 2020. It insures just over four million vehicles.
Other top ten car insurers told Moneywise they are also considering refunding premiums or offering discounts to new ones.