UK Regulator The Financial Conduct Authority (FCA) has started a market study to evaluate the distribution of pure protection products and their coordination with consumer interests.
The study aims to assess whether the market works in accordance with the operational objectives of the FCA and regulations for consumer protection.
Pure protection products such as term insurance, coverage for critical diseases, income protection and the entire life insurance policy are designed to financially support people and their persons in the cases of death, disability or injury.
The FCA expressed concern about practices that may not represent real value, such as unnecessary consumer change driven by intermediaries.
It also expressed concern about commission practices that could inflate premiums, and potential problems with the real value with some products, such as guaranteed acceptance than 50s insurance.
In 2023, pure protection insurance policies led to around £ 4.85 billion ($ 6.27 billion) being paid in claims to support people affected by mourning, illness and injury.
The FCA is concerned that committee structures can influence the results of the consumer and the overall value and the design of the products.
In August of the previous year, the Authority dedicated a detailed study by the sector and sought feedback from the market before the reference conditions for the study were completed.
This study will assess whether the committee structure encourages advisers to recommend unnecessary switching, if insurers increase premiums to pay higher committees to intermediaries and whether the products offer real value.
The FCA is planning to publish initial findings and all proposed following steps at the end of 2025.
FCA supervision, policy, competition and international executive director Sarah Pritchard said: “Consumers rely on pure protection to offer an important safety net, often when they are most vulnerable, whether it is mourning, illness or injury. We are determined to ensure that the market works well and provides good results for improvements.
“When launching the study today, we can take a look before we consider the following steps. We will regularly update stakeholders and welcome the feedback to see us to plan the scope of this assessment.”
“The FCA of the UK initiates probe in protection insurance sales” was originally made and published by Life Insurance International, a brand of global data.
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