Dáil Éireann Debate, Tuesday - 31 May 2016
242. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank is aware that an insurance company (details supplied) has written to at least one customer demanding a significant increase in premium because of a historical mistake made by the company; if it will investigate whether this company has sent similar letters to other customers; and if he will make a statement on the matter. [12740/16]
View answerFirstly, it should be noted that the Central Bank of Ireland has the responsibility for day to day regulatory issues, and is statutorily independent in the exercise of these functions.
While the Bank is prevented from discussing individual regulated firms, it has advised that the regular payment into the plan in question covers the cost of providing the benefits chosen on the plan. In the early years the payments are higher than the cost of the policy holder's benefits. The extra money paid goes into the plan fund. Protection benefits get more expensive as policy holders get older; usually as the plan progresses the payments begin to equal the cost of the chosen benefits. In the later years of reviewable protection plans, the cost of the benefits increases significantly. In order to keep the level of benefits at the current level of payments, the difference is made up from the plan fund.
The insurance company carries out regular reviews (the period in which these are completed can be 5 years, 6 years, 10 or 12 years depending on the product) to see if the consumers regular payment plus any fund that has been built up is enough to cover their chosen benefits for their reviewable protection plan. During a policy review the insurance company may find that the consumer's current level of payments is enough to maintain the level of cover that the consumer wants. The insurance company may also find that the current level of payments is not enough to maintain the level of cover desired by the consumer.
The Central Bank also noted that under it's Consumer Protection Code, firms are required to act honestly fairly and professionally in the best interest of consumers, to act with due care and diligence, and it prohibits firms from misleading customer. Firms must make full disclosure of all relevant material information in a way that seeks to inform the customer.
