At the outset it should be noted that I, in my role as Minister for Finance, have no power to intervene in individual insurance cases. The responsibility for day to day regulatory issues is a matter for the Central Bank of Ireland which is statutorily independent in the exercise of these functions.
While the Question does not specify the type of life insurance product taken out, it appears that it may be a "Whole of Life" policy which pays a specified amount on death. I understand from the Central Bank that a whole of life policy insures the life assured throughout their life, provided the policyholder continues to pay their premiums. It pays out a specified benefit on the death of the life/lives assured. The most common type of Whole of Life policy is a Unit Linked one. With this type of policy the benefit or surrender value is linked to the value of units in the life company unit fund. As the value of the units increase so does the value of the policy, or, as the value of the funds fall so does the value of the policy. If the fund achieves this assumed rate of investment return then the policy should be able to sustain the current level of cover. If however the fund does not achieve this anticipated return, the encashment value of the policy depletes as the cost of covering the benefits exceeds the premium being paid. If this continues, the encashment value of the policy could run out eventually and the life cover would cease. These are distinguished from "Term Life" insurance policies which pay a specified amount on death during a fixed period of time such as 10 or 20 years and have a fixed premium unless index linked.
As a Unit Linked Whole of Life policy does not provide a guaranteed benefit throughout life for a fixed premium, most firms state in their current terms and conditions of these 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.
The Central Bank Consumer Protection Code was introduced in 2006. It requires firms to act honestly fairly and professionally in the best interest of consumers and prohibits firms from misleading customers. Firms must make full disclosure of all relevant material information in a way that seeks to inform the customer. 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.
Section 57BX 3(b) of the Central Bank Act 1942 as amended provides that a consumer may not make a complaint to the Financial Services Ombudsman if the conduct complained of occurred more than 6 years before the complaint is made. The Financial Services Ombudsman is an independent officer and it would not be appropriate for the Minister for Finance to intervene in an individual complaint. However, my officials have contacted the Central Bank and have been informed that if the consumers have documentary proof that they were given misleading information at the point of sale or at any time since then, this should be forwarded to the Central Bank of Ireland.
