Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

148. To ask the Minister for Finance the number of complaints the Financial Services Ombudsman received, and the number upheld, regarding the sale of whole-of-life insurance policies in each of the years from 2012 to 2015; if he is aware of widespread concern regarding very large premium increases being demanded by insurance firms when whole-of-life policies are reviewed; if he is satisfied that consumers are adequately informed of the risks associated with taking out such policies; and if he will make a statement on the matter. [17248/16]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am informed by the Financial Services Ombudsman that the number of complaints received by the him in relation to whole-of-life policies in the years requested were as follows (the figures below include both mis-selling and policy review complaints):

I am further informed by the Financial Services Ombudsman that no complaints have been upheld regarding the sale of whole-of-life insurance policies in any of the years 2012 to 2015, as all complaints received have been in relation to a sale which occurred more than 6 years prior to the date of complaint, the time limit within which complaints are required to be made.

Whole-of-life policies are plans that are designed to provide consumers with life cover for their whole life. As long as the policy holder makes regular payments and the payments are sufficient to maintain the chosen benefits, this type of cover will pay a lump sum on the death of the policy holder.

The regular payment into the plan 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 to see if the policyholder's 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 not 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 of Ireland's Consumer Protection Code was introduced in 2006 and revised in 2012.  It requires firms to act honestly fairly and professionally in the best interest of consumers, acts with due care and diligence, and prohibits firms from misleading customers.

The Central Bank has informed me that it expects that when consumers are sold any product, including unit linked whole of life insurance, that the risks in that product are fully explained. When assessing suitability, a regulated entity must ensure that the product or service is consistent with the consumer's attitude to risk.