How to maintain the payment of financial products during a crisis
Interview with Premium Credit on ways to support employees and customers of financial products and services.
As a financial strain is felt by many due to the continued lockdown, one major area of concern is how to pay for insurance. It might be the case that a customer has been furloughed, has poor cash flow, is unemployed, taken ill or has another mitigating circumstance. Regardless of the reason, maintaining payments is something that many people are struggling with. Whether it is a continued payment, renewing cover or an increase in premium due to extended cover, there are all sorts of reasons why keeping insurance up to date is becoming increasingly difficult.
With a growing number of people experiencing similar issues, how is the insurance sector recognising these circumstances? The Financial Conduct Authority (FCA) have already provided guidance for insurance and premium finance firms on how to supports customers experiencing financial difficulties by recommending the following:
- Interest rate review
- Payment deferrals
They also recently announced proposals to further support consumer credit customers recommending the following:
- Review repayments at the end of payment freeze agreements
- Reduce payment of credit cards and personal loans for three months
- Support overdraft customers
- Extend schemes for customers impacted at a later date
- Avoid any of the above to have a negative impact on credit files
Continuing to remain in operation is also difficult for some firms logistically. However, the FCA have also clarifies that they expect firms to “take reasonable steps to ensure they are prepared to meet the challenges coronavirus poses to customers and staff, particularly through their business continuity plans”. Bearing this in mind, how realistically can these things be achieved?
In terms of practical measures I spoke to premium finance company, Premium Credit, on how they are helping their customers who may be struggling to keep up with repayments of their insurance premium loans while ensuring they are complying with regulation.
James Moorhouse (JM): What payment holiday options are available to customers during the current situation?
Owen Thomas, Chief Sales Officer, Premium Credit (OT): At Premium Credit we strive to provide whatever support we can to assist customers through this challenging period. As always, every customer case will be considered on its own merit and we encourage those with concerns to get in touch with either their insurance broker, provider or us as early as possible.
Payment options for those struggling to maintain their financial commitment vary according to the individual customer’s situation and needs. We can support customers ranging from a reduced monthly instalment to a three month payment holiday, with the possibility of making additional bespoke arrangements too. In some circumstances, particularly personal lines, the payment holiday is agreed with the broker and can also be processed by them through our self-serve portal.
We also advise customers to contact their insurance provider or broker asking them to review their insurance policy and levels of cover to ensure that these are correct, which may in turn alleviate their payment difficulties.
JM: How are loan providers currently affected?
OT: We’ve seen thousands of requests so far for payment holidays or deferrals, as well as new loan applications, particularly from larger commercial lines customers. This unprecedented level of demand for support places an operational strain on all loan providers as they work to provide the appropriate support to customers. We enacted important process and system changes back in March, and we’re pleased to say that our teams and technology have responded extremely well to working remotely and therefore the impact on the service we have been able to provide through these unprecedented times has been minimal.
JM: What common queries are you receiving at the moment?
OT: Typically, customers are looking for some short-term cash flow relief so they can budget effectively through the COVID-19 period. We understand the tough situation lots of customers and businesses find themselves in, and we are working collaboratively with brokers and insurer partners to provide the appropriate help and guidance to those customers requesting support. In addition, many businesses are now considering premium finance as a product that can now provide some cash flow benefits for their business.
Handling finances is not the only thing that continues to cause headaches. The overnight changes in working arrangements has meant that the sector has had to transition seamlessly, causing as little disruption as possible for customers. Ensuring employees and systems can operate efficiently and safely is also just as important as I discover:
JM: What remote working options are available for you?
Josie Pileio, Chief People and Operations Officer, Premium Credit (JP): Having invested significantly in our core IT platforms over the past five years, we have been able to provide significant self-serve functionality to our partners - including the ability to provide payment deferrals at the point where the customer contacts the partner. Brokers and customers have access to our Direct Self Service portal to make changes to personal details, and brokers are able to make alterations to agreements, such as rescheduling and payment date changes, directly into the system enabling a full service delivery as and when needed. There are further remote working support features that can be provided such as our Payment Options service for commercial lines customers where we e-mail customers with a range of ways to pay for their insurance, enabling the transaction to be completed digitally.
These technological investments have also enabled 99% of our people to decamp from the office quickly and smoothly to work entirely from home with little or no limitations. From the contact centre to underwriting to account opening, we continue to service and support all our partners and customers. In some areas demand for our support has massively increased, for examples our CPD accredited training team - called Capability, we are busier than ever, providing remote training courses to over 1,200 individuals last month.
JM: What are the biggest financing concerns you are receiving?
JP: Cash flow is the number one concern customers have at this time. Our priority is to ensure we provide the appropriate support to those who request our help as we continue to deliver the service our partners and customers expect.
JM: Who is most likely to be affected?
JP: Everyone has been affected by COVID-19, from businesses that have seen a downturn in trading because of lockdown restrictions - for example the retail and hospitality sectors, to those involved in moving goods or people. In fact, it’s extremely hard to think of an industry that has not been touched by COVID-19, though we should recognise that some businesses have benefited - for example Amazon and Netflix. That said, the negative impact on business has directly hit many individuals and their household income, as we have seen unemployment rise and many furloughed.
JM: Are they any new options being considered?
JP: COVID-19 will have a lasting effect on loan providers and the insurance sector as a whole, particularly the working patterns and locations of people and meetings. Our use of videocall technology has for instance significantly increased the contact time we can have with our partners. The prevalence of agile technology solutions enabling self-serve for partners and customers, and the increased awareness of different payment options means we should and do expect loan providers to continue to improve the customer experience – a drive towards frictionless customer journeys!
With the FCA constantly reviewing its own guidance and recommendations there isn’t a reliance on a one-time fix to the issues raised by the coronavirus. The circumstances of firms and individuals will change constantly, meaning there needs to be appropriate flexibility to respond fairly. By recognising how to work out how to support your customers, and also from withing the organisation itself so it can support these customers, this will help ensure you are making steps towards good compliance. It is also important to remain up to date with the latest news and guidance as things are constantly being reviewed to ensure good outcomes.
Authored by CII
The Chartered Insurance Institute (CII), the leading professional body for the global financial services profession, exists to promote higher standards of integrity, technical competence and business capability. With over 115,000 members in more than 150 countries, the CII is the world's largest professional body dedicated to insurance and financial services.
Our membership covers all disciplines within the insurance industry (claims, broking, underwriting), those working in the life and pensions sector, the mortgage advice market and financial advisers (under the Personal Finance Society brand).
Our Royal Charter requires us "to secure and justify the confidence of the public" in our members and in the insurance and financial services sector.
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