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Cost of protection to rise

Protection providers have warned that new regulation such as Solvency II and gender-neutral pricing will significantly raise the cost of protection policies from 2013.

Solvency II and gender-neutral pricing are to come into effect on January 1, 2013 and December 21, 2012 respectively. Life companies also have to consider I minus E tax changes.

At the Sesame symposium, Aviva UK chief executive David Barral said: “If advisers sell protection in 2013 they will be doing so at a higher price, so if they have customers who are thinking about buying protection they would be better off buying it in 2012.” Friends Life chief executive Andy Briggs said: “A perfect storm is emerging. Gender-neutral pricing and changes to life company taxation will lead to prices going up but only when they come into force. Pricing ought to stay sensible next year.”


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  1. Regulatory capital held against term assurance is likely to *reduce* as a result of Solvency 2, enabling term life to be priced off (generally lower) economic captial and reducing prices other things being equal.

    The other effects (tax, gender neutral pricing) will indeed tend to push prices up.

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