Source: Sharecast
Pure protection insurance products paid out £4.85bn to consumers in 2023 to support families with financial commitments in the event of bereavement, illness and injury.
However, while the FCA has received relatively few complaints, it said that there are worries about whether the commissions used to sell the products are affecting the outcomes consumers receive and the products’ value or design.
Friday's launch of a so-called Market Study followed an announcement in August, which revealed that the regulator was looking into the sector.
The FCA is examining four specific products in its study: term assurance, critical illness cover, income protection insurance and whole of life insurance.
Among other things, the regulator is looking into whether advisers are wrongfully encouraging consumers to switch deals unnecessarily, and if premiums are being hiked so that insurers can pay higher commissions to intermediary parties.
"Consumers rely on pure protection to provide an important safety net, often when they are at their most vulnerable be it through bereavement, illness, or injury. We are determined to ensure the market is working well and delivers good outcomes for consumers by testing it or suggesting improvements," said Sarah Pritchard, executive director of supervision, policy, competition and international at the FCA.
