Bulletin 12, 2006
Round up
Life insurance rate changes announced by Legal & General.
Insuresupermarket launch term life assurance price comparison site.
OFT announce investigation into PPI sales, and Moneyfacts poll reveals banks are 'too pushy' with PPI sales.
New ABI life insurance and protection working party
We welcome the new committee as the Income Protection industry, in particular, is in need of urgent improvement. We understand that the working party will also look at issues in the term life assurance market, such as Pension Term Assurance and the regulation of over Whole of Life insurance and over 70s business. The Critical Illness working party helped to move the industry forward in the past on a number of issues, including standardisation, however, in truth what we are seeing here is the merging of two parties, one of which has moved too slowly for its market in recent years and the other which hardly moved at all. The new party must question at which point does a working party become more of a hindrance to its market than a help when the market it seeks to improve moves faster than the working party itself. We hope the new committee will prove to be the answer to these issues and look forward to working with them in the future.
Comment of the week
'An indication of high profitability is provided by claims ratios. PPI claims ratios (claims as a percentage of premiums paid by consumers) are estimated to be 15-20 per cent, which is low compared to other general insurance products: for example, claims ratios for motor insurance are 74 per cent and household insurance 55.2 per cent in 2003. PPI is applied to a number of credit products including mortgages, loans and credit cards and protects a borrower's ability to keep up the payments on the loan in case of accident, sickness or unemployment, usually for 12 months or sometimes longer. Around 6.5 to 7.5 million policies are taken out each year generating premium income estimated in 2003 at £5.4billion.'
Office of Fair Trading
Hero of the week
More MPs
As many of you know we have long campaigned to stop what we consider to be the misbehaviour of non-advisers (such as supermarkets and life assurance websites) in selling the wrong types of policy to innocent consumers, promoted by shrewd marketing.
As reported last week we have been taking our case to those MPs who sit on the Treasury Select Committee, asking for their support. All we have spoken to have agreed with our concerns, most with real eagerness to help. So much so that an Early Day Motion we have drafted has now been tabled by Lorely Burt (LibDem), John Greenway (Cons) and Andrew Love (Lab).
Early Day Motion 1884 attracted the support of 25 MPs during the first week and has 34 on board as of today. This includes broad cross-party support with Labour, Conservative, Liberal Democrat and now also the Scottish Nationalists and SDLP (Northern Ireland) all adding their support this week. We also have Mark Lazarowicz on board, who chairs the All-Party Group on Personal Finance.Back to Life Insurance Bulletins
