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Insurers must further ease the burden of high premiums on those struggling to keep up with their payments during the Covid-19 lockdown, the City watchdog has said.
From Monday, firms should help customers by reducing premiums, offering payment holidays or waiving exit fees. The measures will last for three months.
The Financial Conduct Authority (FCA) said insurers must reassess the "risk profile" of customers – which could reduce premiums significantly – and also offer cheaper products that may be suitable substitutes. For example, a customer who is no longer using their car to commute should be able to reduce their insurance cover to account for cheaper social and domestic use.
They should also cancel pricey add-ons or even switch car insurance policyholders from fully comprehensive cover to third party fire and theft. All usual charges and "admin fees" will be waived for any policy changes, the FCA said.
It added: “We expect firms to consider reviewing any interest rates associated with installments to determine whether they are consistent with the obligation to treat customers fairly in the light of the exceptional circumstances arising out of coronavirus.”
If this is not enough, customers can then ask to delay any payments. Customers will have the right to request this option until August 18 and firms must accept the terms, unless, a payment delay would likely lead to the customer struggling financially in future. In this scenario, insurers must consider lowering premiums.
Firms will also offer other reliefs such as waiving late payment fees.
Sheldon Mills, of the FCA, said: “Many insurers have already taken some of the actions we are suggesting. The measures confirmed today will provide urgent support to those that need it.”
People struggling to afford their insurance or premium finance payments should contact their insurer.
Leo Griffen, of insurance comparison site GoCompare, said: "Insurance, and car premiums particularly, can be a significant monthly outgoing for many people. These steps will hopefully ensure that these customers can reduce this while remaining insured and protected."
Mr Griffen said customers looking to cut costs could also take advantage of lower premiums if their policy is about to end.
"We expect some insurers will look to reduce their new premiums in the next few weeks as a result of the lockdown, as a way to attract new customers. There could be some very significant savings for customers," he added.
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