Regulatory guidance on how general insurance providers can better support customers amid the Covid-19 pandemic could be adopted by protection providers, commentators have claimed.
Earlier today (October 16), the Financial Conduct Authority published proposals on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of coronavirus.
Among the proposals was that companies should continue to provide tailored support to consumers who have set up a payment deferral, risk-assessing the consumer to offer lower monthly payments and providing help to avoid the need to cancel necessary cover.
While this applies only to the parts of the insurance market the FCA regulates, advisers have suggested that life and protection providers could also consider adopting some of these measures as best practice, to make sure people do not feel they have no choice but to cancel valuable income protection or critical illness cover.
In fact, some providers have already adopted this as a best practice measure during the pandemic. Kathryn Knowles, co-founder of Cura Financial Services, said: "Some have been doing it [all] to some degree, some are just deferring payments to later."
She added: "It has been a bit ad-hoc, and it is a tough one but some insurers have been offering payment holidays. Some are doing it for a few months, or for a month at a time and then reviewing it. Others are allowing a payment holiday but then requesting customers to pay back the missed premiums."
However, this practice is not consistent for every client, across every insurer and, at the end of the day, insurers still need to pay out claims.
"There needs to be more consistency", she said, and called on providers not to immediately accept the client's request to cancel but to also recommend help or signpost to a specialist who can discuss various options as "standard practice".
This week FTAdviser reported how the nation's 4.5m renters were in Covid-19's firing line, with experts urging clients not to cancel their cover but to ring up and ask what options are available.
Terry Mason, group operations director for Housing Hand, said: “It is difficult to prioritise which bills get paid when you are on limited income and even harder when you only get benefits. You put insurance policies in place for a reason but they are normally the first to not get paid when money is tight.
“Clients should contact the insurer to see if you can have a payment holiday. The worst thing you can do is just not pay them.”
The City watchdog's guidance followed the temporary measures that have been in place since May this year. The newly proposed guidance from the FCA sets out how firms should provide tailored support to consumers who have already had a payment deferral and those newly in financial difficulty due to changed circumstances relating to coronavirus.