Life Insurance
The question
To ask the Chancellor of the Exchequer, what regulatory safeguards are in place to protect consumers from excessive premium increases following the transfer of life insurance policy liabilities.
Answered by Lucy Rigby
Insurers make commercial decisions about the pricing of insurance policies following an assessment of the relevant risks. However, the Government expects that insurers deliver good outcomes to consumers and firms are required to do so under Financial Conduct Authority (FCA) rules.
These rules require firms to ensure their products offer fair value. This means the price paid by consumers must be reasonable compared to the benefits they receive. The FCA monitors firms and has robust powers to act against firms that breach its rules.
The FCA and the Prudential Regulation Authority review the terms of transfers of business between insurance providers to ensure an appropriate degree of consumer protection, and the views of both regulators are considered by the Courts as part of the transfer process. The FCA would, for example, expect to see evidence that policyholders would not be adversely affected by any changes to the way their policies will be administered (including with respect to pricing) after a transfer.
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