"Communication between insurer and intermediary is also key so that the help can reach those customers who need it the most."
The new guidance aims to help customers facing financial difficulties due to coronavirus and asks insurance firms to consider ways in which monthly premiums could be lowered.
Where amendments to the insurance cover do not help alleviate temporary payment difficulties, the FCA says it "expects firms to grant customers a payment deferral".
The guidance applies to GI and protection contracts and aligns the assistance available to options provided for other financial products, such as mortgages.
The AMI says it is supportive of insurers who allow customers to pay back deferred payments over a period of months, as the ability to stagger repayments rather than in one lump sum may encourage the customer to keep their cover in force, instead of cancelling a direct debit.
However it says insurers "need to be clear" on how they deal with broker commission during a customer payment deferral and says a "sensible and fair approach would be for there to be no impact on commission". Some insurers have already confirmed this, and the AMI is now encouraging transparency from other insurers.
Within their statements on payment deferrals, many insurers have recommended financial advice. The AMI says it is "crucial" that customers receive advice on deferring payments, which is why it "is so important that insurers communicate clearly and promptly to intermediaries what customer assistance is available".
Stacy Reeve, senior policy adviser at AMI, said: “Protection and general insurance advice during these times is more important than ever and intermediaries, many of whom have built strong relationships with their customers and are a trusted adviser, can help customers to understand the options available.
"Communication between insurer and intermediary is also key so that the help can reach those customers who need it the most. The FCA has been clear that they will want to see firms across the distribution chain working together to ensure that customers are treated fairly, so joined-up communication is vital.
"Intermediaries may wish to use this FCA guidance to ignite protection discussions with their customers. Customers may be actually or potentially vulnerable and the uncertain situation we find ourselves in can be very unnerving for many. Ensuring that customers maintain appropriate cover has got to be the aim.”
