Bulletin 31, 2006
Round up
1 - the number of life insurance rate cuts since the last bulletin, this time from Bright Grey
20 – the average number of calendar days it takes to accept all forms of life insurance and protection applications – that's life cover, critical illness cover and income protection
40 - the new maximum term over which critical illness cover can now be bought from Bright Grey
42 - the average number of calendar days it takes to accept an application specifically for income protection
£455,000 - the amount Loans.co.uk were fined by the FSA this week for PPI mis-selling
Protection mis-selling
The FSA says Loans.co.uk did not treat it’s customers fairly and has imposed a fine of nearly half a million pounds saying that the 14,400 customers who were sold the policies may not have needed them and were not given enough information to make a proper decision.
The FSA was very critical of the way the company had been selling the insurance and said the company had not treated its customers fairly because they were not given enough information at the point of sale to make an informed choice, and also that the company did not keep proper records to show that its advice had been correct.
Margaret Cole, FSA director of enforcement, said: "Loans.co.uk Limited failed to make sure adequate processes were in place to ensure the suitability of its PPI recommendations and treat its customers fairly. Customers should come away from the sale having been given the best possible information to understand that the PPI is optional, what the policy will and will not cover and how much it costs."
Last week the FSA also stated that one it’s desired outcomes is that “customers are clear about whether they have been given advice”.
It is becoming clear to us that the FSA are taking the issue of non-advice in the life insurance and protection industry very seriously indeed.
Comments of the week
‘The principle of PPI is a good one but it has been turned into a cash cow by greedy banks.’
Vince Cable
Lib Dem Shadow Chancellor
(Quote taken from Money Marketing)
‘The claims figures from life insurance company Norwich Union are fascinating when you compare with incapacity benefit claimants where cancer accounts for just 1.5%. It is a difficult comparison and needs careful analysis, none the less if anything demonstrates that Income Protection and Critical Illness Cover cover totally different needs - this is it.’
Clive Waller
Senior Partner, CWC Research
Heroes of the week
It’s been a busy week for positive developments in the life insurance andprotection market this week, so much so that we have four providers to commend.
Royal Liver - who this week launched a new Critical Illness definitions guide to accompany their recent adoption of the new ABI’s guidelines. This should prove useful for both advisers and consumers in understanding when critical illness policies will pay out, and when they wont.
Scottish Equitable - who this week updated their ‘understand claims’ adviser guide, which echoes the comments above.
Scottish Widows - who this week issued a new life insurance and protection report highlighting various statistics including consumer attitudes towards life insurance and protection and the consequent effect on the UK protection gap.
Again, the life insurance company, Royal Liver - who impressed LifeSearch and Baigrie Davies so much with the complex underwriting of a specific case, including the urgent arrangement of a medical and ongoing meaningful updates, that we sent the underwriter in question a bottle of wine!
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