Michael McGrath (Cork South Central, Fianna Fail)
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46. To ask the Minister for Finance his views on the lifesaver plan sold by certain life assurance companies by which the quarterly premium is regularly reviewed and increases very significantly as the policyholder gets older; and if he will make a statement on the matter. [3964/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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I understand that the type of product the Deputy is referring to in his question is a whole-of-life insurance policy. This is a product, which my officials have previously sought information from the Central Bank on. In response, the Bank has indicated that it is designed to provide consumers with life cover for their whole life. As long as the policyholder 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 policyholder. Regular payments into the plan cover the cost of providing the benefits chosen on the plan. In the early years, the payments are higher than the cost of the policyholder’s benefits, with the extra money paid going into the plan fund. However, protection benefits get more expensive as policyholders get older with the result that payments into the plan begin to equal the cost of the chosen benefits. In the later years of reviewable protection plans, the cost of the benefits increases significantly, and in order to keep the level of benefits at the current level of payments, the difference is made up from the plan fund. In order to see if the consumer’s regular payment plus any fund which has been built up is enough to cover their chosen benefits for their reviewable protection plan, an insurance company carries out regular reviews of these plans. I understand that the period in which these regular reviews are completed can be five, six, ten or twelve years depending on the product.

During such a review, the insurance company may find that the consumer’s current level of payments is enough to maintain the level of cover which the consumer wants. However, 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, thus explaining why policyholders can find that their premiums are increasing. I understand it is generally following these reviews, that some people, particularly those that are more elderly, may find that their level of payments are being increased. This is the nature of this product, and as with any type of insurance product, there is no role for the Department of Finance or the Central Bank in any of these reviews as these are an individual matter for each insurance company and may differ from policy to policy.

I would however encourage any consumer who is dissatisfied with the service they have received by their insurance provider to issue a formal complaint to give the provider a chance to sort out the problem. The provider should deal with any complaint through its complaint handling process. This is called an internal dispute resolution process (IDR process). When the provider’s IDR process has been completed, a consumer can then complain to the Financial Services and Pensions Ombudsman (FSPO) if they are not satisfied with its final response. The FSPO is a statutory official who acts as an independent arbiter of disputes which consumers may have with their financial service provider.

The Deputy will also note that the Financial Services and Pension Ombudsman Act 2017was amended to provide for changes to the six year rule in relation to long-term financial products. This means that a person can now make a complaint to the Ombudsman within any of the following limits:

- 6 years from the date of the conduct concerned;

- 3 years from the date on which they became aware, or ought reasonably to have become aware, of the conduct concerned; or,

- Where it appears to the Ombudsman that there are reasonable grounds for a longer period and that it would be just and equitable in the circumstances, the time limit may be extended.

Finally, I would note that there is an onus within the Central Bank’s Consumer Protection Code for companies to act honestly, fairly and professionally in the best interest of consumers, to act with due care and diligence, and prohibits firms from misleading customer. The Central Bank 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.

In conclusion, the Deputy will appreciate that I am not in a position to direct insurance companies, through insurance legislation or otherwise, as to the pricing level for whole-of-life insurance policies, as to do so, would be a breach of the EU and Irish legal framework.