Thursday, 15 October 2020
Department of Finance
124. To ask the Minister for Finance if his attention has been drawn to the fact that persons with type 1 diabetes are being turned down for life insurance and mortgages due to the Covid-19 crisis; and the steps he will take to assist these affected persons. [30760/20]
At the outset, while I have an appreciation of the difficulties individuals may find themselves in as a result of the COVID-19 pandemic, neither I, as the Minister for Finance, nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so. Consequently, I am not in a position to direct insurance companies as to how they price their policies or what terms and conditions they apply in those policies.
It is my understanding that insurers use a combination of rating factors in making their individual decisions on whether to offer life insurance, such as mortgage protection cover and what terms to apply. These factors can include age; health; family medical history; occupation; and lifestyle. In addition, these may be determined or linked to the policy duration. In the case of mortgage protection policies, these tend to be over the lifetime of the mortgage repayment schedule. In addition, my understanding is that different insurers do not use the same combination of rating factors. Accordingly, prices and availability of cover varies across the market, and will be priced in accordance with firms prior claims experience.
In order to assist with the Deputy's specific query, my officials contacted Insurance Ireland, the representative body for such providers in Ireland. It stated that while most customers are still be able to get life; critical illness; or mortgage protection insurance at this challenging time it is aware of a small number of individual cases where a final decision on some life insurance applications is being postponed for a period of time where applicants have an underlying health condition. However, it stated that while unaware of any cases where life cover has been denied, such policies are assessed on a case-by-case basis and that underlying health conditions, such as Type 1 diabetes, will be taken into account by the underwriters, as was the case pre-Covid. Insurance Ireland further noted that it understands that mortgage protection is not a universal requirement for mortgage approval by banks who in practice apply the following exceptions to holding life cover when an applicant applies for a mortgage:
- The applicant already has sufficient life cover.
- The applicant is over age 50.
- The mortgage is not on the applicant’s principal private residence.
- The applicant cannot get insurance, or only at a much higher rate than normal.
Notwithstanding this, the Deputy will be aware that both I and Minister of State Fleming have consistently and publicly stated that in the context of COVID-19 that we expect insurance firms to treat their customers fairly, honestly, and in accordance with the Central Bank’s Consumer Protection Code. Where somebody feels they have been treated unfairly by a particular insurance provider, they have the option of making a complaint to the Financial Services and Pensions Ombudsman (FSPO). The FSPO acts as an independent arbiter of disputes which consumers may have with their insurance company or other financial service provider. The FSPO can be contacted either by email at email@example.com or by telephone at 01-567-7000.
125. To ask the Minister for Finance if in his engagement with the banks regarding payment breaks, the issue of borrows repaying interest only was raised; his views on the merit to the proposition; and if he will make a statement on the matter. [30787/20]
On 18 March last, the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. This was a welcome initiative and it allowed important and necessary cash flow relief to be quickly and efficiently provided to borrowers. However, the other aspects of a loan agreement, including the issue of interest accrual during the period of the payment break, remained a commercial matter for the parties to a loan agreement.
Banks have now provided for flexible options for borrowers who can recommence payments following a Covid-19 payment break, and the BPFI has produced a useful guide on this - . The Central Bank has also updated its Covid-19 FAQ in relation to mortgage payment breaks on 18 September.
However, I am very conscious that many other borrowers continue to be impacted by the economic consequences of Covid-19, and that they may not be in a position to resume their loan repayment commitments when their payment break ends. I am fully aware of the stress and uncertainty that these borrowers are still facing, and they will continue need assistance and support from their lenders.
At our meeting on 28 September, this point was made very clear to the CEOs of the country’s retail banks, and to the BPFI, by the Tánaiste, the Minister for Public Expenditure and Reform and myself. It was also indicated that it is particularly vital that lenders work with their customers to ensure that suitable arrangements are put in place to assist their customers who are still experiencing difficulty. Borrowers have a suite of regulatory protections and lenders have specific obligations to support and work with borrowers still experiencing mortgage or other loan difficulty because of Covid-19. These options could include additional flexibility, and this could be short term such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. Each individual’s position is different and that’s why a case-by-case approach is now the best approach as some sectors of the economy are more impacted than others.
I will also continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection framework will be fully available to mortgage and other borrowers that will still need support following a Covid-19 payment break.