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Law360, London (July 24, 2020, 3:10 PM BST) -- The Financial Conduct Authority said Friday that it plans to extend temporary measures to help consumers who are struggling to pay their insurance premiums amid the coronavirus pandemic.
The City watchdog is consulting on whether to extend the offer of payment deferrals for customers of insurance companies until the end of October. The rules came into force on May 18 for three months in response to policyholders losing their jobs or falling ill during the government-imposed lockdown.
The measures require insurers, and lenders offering financing for insurance premiums, to switch their customers to products that are better suited to them during the COVID-19 crisis. Insurers and lenders can also cut the cost of premiums.
Insurers can also grant payment deferrals for up to three months if amending cover for struggling policyholders will not help them. Insurers should ensure that a break is in the best interests of customers, the FCA said.
"It is important that customers don't leave themselves uninsured, and that their insurance cover meets their demands and needs," the regulator said on Friday. "Those struggling to afford their insurance or premium finance payments because of the impact of coronavirus should contact their insurer or insurance broker to discuss their options."
The original measures are due to end in August. The FCA is asking the industry for responses on its proposals to extend the rules until Oct. 31. Insurers and lender have until July 28 to respond.
The FCA has said the measures are allowing financial services companies to reassess the risk profile of their policyholders to accommodate the pandemic — an individual seeking car insurance might not need comprehensive cover if he or she is working from home.
Insurers and lenders are also able to waive cancellation fees and charges for missed payments and other costs associated with financial products. They should also consider reducing premiums for some policyholders and refunding excess premiums that have been paid up front.
The FCA has also introduced payment freezes and loan holidays on high-cost credit products, including payday loans and car finance. The regulator has also put in place mortgage breaks.
--Additional reporting by Lucia Osborne-Crowley. Editing by Ed Harris.
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