Customers have struggled to afford insurance premiums due to the coronavirus, according to a majority of insurance professionals surveyed by the Chartered Insurance Institute (CII).
A June poll of 221 CII members found that 61 per cent had been contacted by consumers who could no longer pay their insurance premiums, as their finances had been affected by the economic fallout caused by the coronavirus.
Members were also asked about the measures they had taken to assist clients who were struggling to pay premiums, and reported ensuring customers maintained cover at a cost they could afford in light of their financial circumstances.
For example, British Friendly policyholders can reduce their benefit level for up to three months to help alleviate financial difficulties.
Keith Richards, managing director of engagement for the Chartered Insurance Institute, said: “During these challenging times, insurance and personal finance professionals are helping consumers and assisting those who are experiencing temporary financial difficulties.
“Insurance brokers and financial advisers are best placed to consider a customer’s individual needs and their services should be sign-posted more widely. It is great to see our profession helping customers revise and retain cover at a price they can afford to ensure they remain protected against key risks.”
Dominik Lipnicki, director at Your Mortgage Decisions, commented: “It is not surprising that some clients are experiencing financial difficulty and this may well get even worse once the furlough scheme comes to an end. We all remember protection policies being cancelled after the 2008/09 economic crash, with many clients leaving themselves dangerously exposed.
“Advice is what matters here, ensuring that clients realise just how important their insurance policy is, so that if a cut in the budget is needed, priority is given to these vital protection products."
He added: “Right at the start of this pandemic, we have seen some providers offering payment holidays for the protection clients and without a doubt these would have helped.
"Even when a premium becomes unaffordable, many clients do not realise that some protection is better than no protection and their adviser can review what they have and offer a cheaper, affordable option.
"Good advisers will ensure that they stay in touch with their clients so that help is on hand when needed and the client, where possible remains as protected as possible.”
The survey by the CII followed a series of temporary measures confirmed by the Financial Conduct Authority in May to help insurance customers who may have been experiencing financial difficulties as a result of the coronavirus.
The measures required firms to consider the options they can provide to customers such as reassessing customers’ risk profiles, which may have changed because of coronavirus, with the scope to offer materially lower premiums.