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Law360, London (October 30, 2020, 4:55 PM GMT ) The Financial Conduct Authority on Friday published its finalized guidance for insurers and premium finance firms for supporting customers who have deferred payments or entered financial difficulty because of the coronavirus pandemic.
The guidance is aimed at prompting businesses to support qualifying customers, such as by lowering the threshold of financial distress, and by making sure that people continue to have insurance that meets their needs, the FCA said.
The final measures follow guidance issued in August that was created to help businesses quickly provide temporary help to customers affected by the pandemic before they could get back on their feet again. The August guide expires Oct. 31 while the new guidance takes effect Nov. 1.
Some aspects of the August guidance will still apply, such as regarding customers granted payment deferrals, the FCA said.
The updated guide outlines situations where a customer contacts a firm because they are having difficulties making repayments.
"For example, the customer may want to reduce cover … or ask about their insurance cover in the light of coronavirus," the FCA said.
Businesses should also consider if it's necessary to contact a customer who has not contacted the firm but has missed payments during the pandemic.
"This is a change from the August guidance under which we expected all customers who missed payments to be contacted," the FCA said.
The guidance also sets out measures to be followed by businesses that have customers who have entered into credit agreements for their insurance premiums. The business should not exercise its right to cancel an insurance policy unilaterally because of the customer's financial difficulty in meeting premium finance payments.
Such firms should also handle customers with "forbearance and due consideration," it adds, which may include allowing customers to make no payments or reduced payments for a specified period.
The guidance published on Friday applies to businesses in the insurance industry including insurers, insurance intermediaries and premium finance lenders that provide credit to fund the payment of insurance premiums in installments.
In addition to announcements from the regulator about support during COVID-19, insurance businesses have also published measures to help customers affected by the pandemic.
This includes saying customers who usually work from the office, but now operate from home because of the pandemic, will not need to update their home insurance cover for an extended window period.
--Additional reporting by Martin Croucher. Editing by Rebecca Flanagan.
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