View more on these topics

Critical condition as premiums set to rocket by 50%

Guaranteed critical-illness policy premium rates could leap by 50 per cent in the next 10 months in a dramatic market shift which IFAs fear could spell the end of the market.

They claim the guaranteed market would virtually disappear as consumers already think CI cover is too expensive.

Guaranteed CI, which offers review-free premiums, dominates the market, accounting for almost 98 per cent of the 750,000 policies sold in 2001.

The premium rises, expected to coincide with a revised ABI code of practice due in May, would mark the first major increase in premiums and follows the announcement by reinsurer Swiss Re in June that it was stopping underwriting guaranteed business.

Rival reinsurers have been telling product providers that they will be raising their charges to cushion their exposure to the risk.

Providers admit that consumers would bear the brunt of the increases.

They say there will be a place for guaranteed business but consumers will have to pay more if they want to avoid reviewable premiums.

Norwich Union head of pensions and protection propositions Willie Mowatt says: “If consumers really feel they want a guarantee it will be there but they will be looking at paying more.”

Skandia protection brand manager Shelley Robertson says: “It looks as if the increase in the guaranteed CI market could be as much as 50 per cent or more in some cases.”

Rickman Tooze adviser John Haynsworth says: “The feeling is that guaranteed business is generally quite expensive. If the premiums go higher, it will probably just kill off the market.”

Recommended

Zurich Bank to close

Zurich Financial Services is today closing Zurich Bank, its UK internet bank, to new business and withdrawing the service completely in the spring of next year. The move to close the bank, launched late last year in a joint venture with HBoS, is a result of Zurich Financial Services&#39 decision announced today to refocus itself […]

Zurich Group announces loss of £1.3bn

Zurich Financial Services Group today announced a loss after tax of £1.3 billion or $2bn in its half year results for 2002. It says this is a result of its strong premium growth and improved claims performance being more than offset by a significant decline in realised and unrealised capital gains and special provisions totalling […]

New fixed loans from Chelsea Building Society

Chelsea Building Society has announced the launch of two fixed rate mortgages available from August 31.The first will be capped at 2.99 per cent for two years and the other fixed at 4.69 per cent for three years. Both will revert to the Society&#39s standard variable rate following the fixed periods. The SVR is currently […]

&#39Use MP pension rise to aid state scheme&#39

One in five UK voters believes the improved pension deal that MPs passed for themselves in July is disgraceful and more than a quarter think that the extra cash should be used to boost the state pension, according to research conducted for stockbroker Comdirect. The survey reveals that 21 per cent of people think the […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment