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Insurance Coverage

Dáil Éireann Debate, Tuesday - 16 November 2021

Tuesday, 16 November 2021

Questions (210, 227)

Brendan Howlin

Question:

210. Deputy Brendan Howlin asked the Minister for Finance the options available a couple in full-time employment with the clear expectation of being able to repay the mortgage over a lifetime of work in circumstances in which they require life insurance to secure a mortgage for a home loan and such insurance is unavailable due to a congenital illness; if there is a requirement for the insurance industry to offer life insurance in these circumstances; and if he will make a statement on the matter. [55495/21]

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Rose Conway-Walsh

Question:

227. Deputy Rose Conway-Walsh asked the Minister for Finance if his attention has been drawn to the fact that persons with eating disorders are currently being denied access to mortgage protection insurance policies at times on a near permanent basis in respect to persons with long-term conditions; the steps he is taking to address the issues faced by persons unable to access life insurance; and if he will make a statement on the matter. [56076/21]

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Written answers

I propose to take Questions Nos. 210 and 227 together.

I note that both questions refer to access to life insurance products for individuals with specific illnesses or medical conditions in the context of applying for a mortgage. At the outset, it is important to note that neither I, nor the Central Bank of Ireland, can intervene in the provision or pricing of insurance products, nor can we compel any insurer operating in the Irish market to provide cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance (the Solvency II Directive).

It is my understanding that generally, insurers use a combination of rating factors in making their individual decisions on whether to offer life insurance and what terms to apply. These can include age; health; family medical history; occupation; and lifestyle. In addition, these may be determined or linked to the policy duration. In the case of mortgage protection policies, these tend to be over the lifetime of the repayment schedule. In addition, my understanding is that different insurers do not use the same combination of rating factors. Accordingly, prices and availability of cover varies across the market, and will be priced in accordance with firms’ prior claims experience.

My officials have previously engaged with Insurance Ireland about accessing life insurance in similar circumstances to those referenced. According to Insurance Ireland, it is not standard practice to automatically decline cover for any cohort of applicants. It stated that insurers are obliged to assess the risk involved as part of any application for a life insurance policy, which will be specific to the individual applicant, and that the availability of cover depends on a number of factors. In this regard, I understand that applicants are asked questions about various conditions in order for insurers to assess the risk involved, and that all applicants are assessed against the same criteria. If higher risk is identified as a result of this assessment, Insurance Ireland has advised that the policy will be adjusted accordingly, and cover may be declined if the applicant poses a risk beyond the insurer’s threshold.

Finally, with regard to mortgage protection insurance and securing a home loan, I am aware that under Section 126 of the Consumer Credit Act 1995, lenders can provide a mortgage in situations where a borrower may be unable to obtain life insurance, or where such insurance is unduly costly compared to that payable by borrowers generally. In this regard my officials have consulted the Banking and Payments Federation Ireland (BPFI) which has indicated that it estimates that, on an annual basis, 2% of mortgage approvals to consumers have been granted a waiver, and only 0.05% of mortgage applications approved by its members did not proceed to draw-down due to a lack of mortgage protection insurance. Importantly, consumers who feel they have been treated unfairly by any financial service provider, including an insurer, can make a complaint to the Financial Services and Pensions Ombudsman (FSPO).

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