Clampdown on health insurance sales
Monday 23 October 1995
The Personal Investment Authority, the financial watchdog, is to clamp down for the first time on health insurance and long-term care products, a market that is worth hundreds of millions of pounds a year.
It is considering regulating their sale in order to avoid a scandal like that which hit personal pensions.
PIA officials are planning to draw up a discussion document during the next few months to debate the merits of tough controls on the rapidly growing health and medical insurance sector.
Although no decision is expected for some months, senior PIA executives are confident that they will be drawing up rules for some or all of the sector by the end of next year.
One source said: "One should not underestimate some of the problems involved in arriving at a workable compromise in this area. But it is virtually inevitable that there will have to be something in place in the very near future.
"This is a market which many people expect to boom. There would be an outcry if we were to see a repetition of the personal pension scandal in a few years' time."
The PIA's initiative comes at a time when the Government has been strongly signalling its own move away from providing totally for people who fall ill and the elderly in need of long-term care. The market for such products has risen sharply. Last year, about 10,000 people took out long-term care policies for the first time, three times more than in the previous 12 months.
The cost of a single premium for someone aged 60 or over, at present the largest market for such policies, can be about pounds 10,000.
The remaining health insurance market, including medical and critical illness cover, is already several times larger than this and is widely expected to grow in the next decade.
Critics have claimed that allowing the uncontrolled sale of such products may lead to a problem of massive mis-selling, with many elderly people discovering too late that they have received bad advice.
Earlier this year, the Association of British Insurers, the industry's trade body, published a detailed statement of best practice for members. However, an ABI spokesman said yesterday this should not be taken to mean that the insurers association supports regulation led by the PIA. Most companies are now willing to see long-term care products being regulated by the PIA. They also argue that health and medical insurance should remain largely unregulated.
Peter Gatenby, appointed actuary at PPP Lifetime Care, said: "We are in favour of regulation by the PIA in areas of training and competence of saleforces and advisers. We also believe that proper financial fact- finds of clients should be carried out.
"Obviously, any rules would have to reflect the difference between the products we are marketing and other investment products," he added. I would not be in favour of regulating health and medical insurance."
Other senior executives, who refused to be named, conceded that unless they accept that all health and long-term care products will come under the watchdog's scrutiny they will eventually have controls imposed on them.
- 1 Rihanna 'nude photos' claims emerge on 4Chan as hacking scandal continues
- 2 Frank Lampard equalises for Manchester City against Chelsea: how Twitter reacted
- 4 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
350 skinny dippers brave Northumberland seas for record attempt at mass naked swim
Rihanna 'nude photos' claims emerge on 4Chan as hacking scandal continues
Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
Jennifer Lawrence leaked 4Chan sex video branded 'fake' by forum users
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
iJobs Money & Business
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...
£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...