Dáil Éireann Debate, Wednesday - 8 July 2015
67. Deputy Seán Crowe asked the Minister for Finance if he is aware of the practice in whole-of-life insurance policies where the premium continues to rise as the customer ages; his views that this practice is in line with regulatory norms; and if he will make a statement on the matter. [27823/15]
View answerAt the outset it should be noted that the Central Bank has the responsibility for day to day regulatory issues, and is statutorily independent in the exercise of these functions.
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 services firms (including all insurance companies) should interact with their customers. The Central Bank advise me that the Code 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 claims volumes and the nature of the product.
"Whole of Life" policies cover the policyholder for their entire lifetime, or for as long as the policyholder wishes to continue to pay premiums. The Central Bank has previously 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.
Most firms state in their current terms and conditions of "Whole of Life" policies that they will carry out regular post sale reviews. The post-sale policy review will determine if it is likely that the premium currently being paid can maintain the current level of life cover until the next review date. If it seems likely that the fund value of the policy will not be sufficient to maintain the policy to the next review date, the firm will recommend that the policyholder either increase their premium or reduce the level of life cover provided by the policy.
Policyholders who feel that the premium increases which have been proposed by their insurer are unfair are advised to refer the matter to the Financial Services Ombudsman for adjudication at www.financialombudsman.ie/.
