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Home Lifestyle FCA issues ‘Dear CEO’ letter amid fears people will cut insurance during cost-of-living crisis

FCA issues ‘Dear CEO’ letter amid fears people will cut insurance during cost-of-living crisis

by uma

 

  • FCA is concerned households will cut back on insurance cover during the cost-of-living crisis.
  • Low-income households already tend to have less insurance and often pay higher premiums for their cover.
  • FCA has written to insurance company bosses urging them to make sure customers are protected from unnecessary products or fees.
  • They are being urged to help customers by making sure they are in the right products and work with them to stop them cancelling necessary cover.
  • The letter said the FCA would “continue to monitor and scrutinise firms using our powers where necessary.”

The FCA’s letter: Dear CEO letter: Our expectations on cost of living and insurance (fca.org.uk)

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Today’s move by the FCA aims to protect households who may feel they need to cut back, or even cancel, their insurance policies to relieve the tension on their stretched budgets in the coming months. Lower income households already tend to have less insurance and they often pay higher premiums. The HL Savings and Resilience Barometer shows only 43% of households have adequate life insurance cover for instance and this drops to just 27% of lower income households. There’s concern that as inflation continues to rise people may target insurance as their next spending cut.

Today’s letter to insurance company CEOs urges them to do all they can to protect their customers by working with them to make sure they are in the right products and not incurring any extra fees. Those customers who are in difficulty should be helped so that they don’t cancel much-needed cover. It warns firms that they will be monitored and that the FCA is willing to use its powers where it feels firms aren’t working in their customers’ best interests.

It may be tempting for people to save money today by cutting back on insurance cover. However, doing this can have much bigger financial consequences. One example given is someone deciding against buying travel insurance but then becoming ill on holiday and incurring large medical bills.  Another could be cutting back on income protection and then losing your job. The potential to exacerbate financial problems is huge and people could find themselves in the awful position of financial worries affecting their health which can then make these worries even worse.”

 

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