Reinsurers could lose their hold over the protection market and premiums could fall if the FSA relaxes its rules surrounding capital adequacy reserves for life companies.The FSA’s consultation paper, CP06/16 Prudential Changes for Insurers, is proposing to relax the solvency rules that require life companies to keep huge reserves of capital to mitigate potential losses. If the proposals go through, insurance companies will be able to release some of their capital reserves to fund growth in other areas of the business. Standard Life chief executive Trevor Matthews believes this could drive premiums down as extra capital released is fed back to the consumer. Former Abbey chief Paul Bradshaw agrees this could be one impact and he also considers that the rules could reduce reinsurers’ hold over the protection marketplace. At the protection review dinner in July, Bradshaw said that reinsurers’ domination of the market is detrimental to life companies and consumers. He said the majority of protection business is supported by capital from a small number of reinsurers which help design overly complex application forms leading to an unacceptable declinature rate. Bradshaw says: “If the detail is that the FSA is taking a more relaxed stance to capital reserves then it would remove the need for reinsurance to a certain extent. This is a trend that I would welcome. It will marginally reduce the power of the reinsurers.” Scottish Widows protection marketing manager Nick Kirwan says: “Getting capital freed could help with innovation. I think it means we will be less reliant on the reinsurers but how far will depend on the exact rules. The reinsurers will have to start sweet-talking their insurers a bit more than they have in recent years.” Direct Life & Pensions sales and marketing director Richard Verdin says: “It will certainly weaken the hold that some reinsurers have over some insurers. Reinsurers are potentially the only losers.”
Royal London’s profits from new business grew by £22m in the first six months of this year compared to £37m for the full year in 2005. The provider is now the UK’s largest mutual life and pensions company since Standard Life’s demutualisation was completed in July.
Fidelity is looking to secure UK distributor status for its 12 Luxemburg-listed multi-manager funds. The three multi-asset portfolios and nine specialist funds focusing on a single region or sector are registered for sale across Europe, including the UK. The firm says they will appeal only to UK investors who gain access through offshore bonds but […]
The pressure is being piled on Scottish Widows to join equity- release trade body Safe Home Income Plans. A Money Marketing poll reveals that over two-thirds of our readers think Widows should join. Last month, Widows was ordered to change its Key Facts Illustration by the FSA after faults were uncovered.
F&C Asset Management is set to close its AIM growth fund on October 30 due to lack of investor demand.The £7m fund was launched in September 2001, and has been run by Catherine Stanley since October 2004. Stanley also runs the group’s UK smaller companies fund.
Jelf Employee Benefits highlights new legislation, key requirements and policy considerations when structuring international private medical insurance (IPMI) for expatriate employees in Qatar. This edition will be of particular interest to global human resource directors, compensation and benefits specialists and mobility managers who have employee populations in Qatar.
- Top trends
News and expert analysis straight to your inboxSign up
Latest from Money Marketing
Will PI cover stand up to the DB transfer test?
Providers are reviewing their marketing packages to advisers at conferences and on websites amid concerns they will fall foul of new inducement rules under Mifid II. Mifid II, which came into force on 3 January, brought in more stringent rules around “non-monetary benefits” from providers to advisers. The rules have been translated into the FCA conduct of […]
A misleading headline rate of unemployment means opportunities are being overlooked by investors