Financial Conduct Authority Moves on Car Insurance Industry
City watchdog, the Financial Conduct Authority, has instructed car insurance companies to cut premiums, scrap administration fees and allow deferred payments. The move comes as the Covid-19 crisis continues wreak havoc across the UK and the financial impact sets in as millions struggle to manage their personal finances. The move will be seen as a welcome step by many as the economy stalls and people are unable to go to work.
Lowering Premiums & Waiving Fees
The instructions are due to come into effect on Monday, 18th of May. Insurers have been told to offer payment 'holidays' to customers who are struggling to make ends meet. Also, 'exit fees' are to be waived for those that want out of their policy. In terms of reducing the cost of policies, insurance companies have been instructed to reassess the 'risk-profile' of their customers with a view to driving down fees.
The impact of these changes will be wide reaching and should help many who are financially struggling to get through the crisis. Companies have been told to assess individual customers to see if there is a better fit and cheaper option they can switch to help them through the pandemic. These changes could result in a reduced monthly fee for those that pay by the month, or a partial refund for customers that pay yearly up-front.
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3 Months Deferred Payments
If an insurer cannot reduce the cost of a customers premium or switch them to a cheaper alternative they have been instructed to accept deferred payment of between one and three months. For scenarios where a customer needs a deferred payment period of greater than three months, it will be at the company's discretion to consider deferring payments for linger. Either way, car insurance customers can expect to get some form of relief, be it reduced premium, waived fees or deferred payment.
Contact Your Insurance Company
Customers that are struggling are urged to contact their insurance company to explain their situation and investigate what alleviation options are available to them. It may be up to the customer to get the ball rolling, so if you need some assistance make sure you get in touch with your insurance company to discuss the recommendations and how they can apply to you.
Sheldon Mills - Financial Conduct Authority
Speaking to reporters, Sheldon Mills of the Financial Conduct Authority stated "We have worked quickly to draw up measures to help policyholders in financial difficulty because of corona virus. The majority of respondents expressed support for the proposals we published at the start of May. 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.”
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