Wednesday, 3 July 2013

Questions (78)

Joanna Tuffy


78. Deputy Joanna Tuffy asked the Minister for Finance the protections there are for holders of life insurance policies against insurance companies unreasonably and arbitrarily increasing the premiums to be paid by the policyholder; and if he will make a statement on the matter. [32477/13]

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Written answers (Question to Finance)

At the outset the Deputy should note that neither I nor the Central Bank has the power to intervene in such matters as pricing of insurance policies is a commercial decision for firms to make themselves based on the risks involved. It should be noted that consumer issues are covered by the Central Bank’s Consumer Protection Code which amongst other things sets out a series of general principles about how financial service firms (including all insurance companies) should interact with their customers. The Code however does not prohibit or restrict an insurance company from increasing its annual premium rates, as this is a commercial decision for the company in question and is generally determined by such issues as higher claims volumes, and the nature of the product.

My Department has previously had a number of enquiries about this type of issue and it would appear that in most instances people have what are known as “Whole of Life” insurance policies. The Central Bank has advised that premiums for such policies are not fixed and can increase over the duration of the policy. “Whole of Life” policies which cover the policyholder for their entire lifetime while the policy is active must be distinguished from “Term Life” insurance policies which cover a fixed period of time such as 10 or 20 years and have a fixed premium unless index linked. Finally, it should be noted that if a policyholder has a complaint about an insurance company not honouring a claim on a policy, they can refer the matter to the Financial Services Ombudsman for adjudication