UK’s finance watchdog launches probe into pure protection insurance sector

LONDON (Reuters) – Britain’s Financial Conduct Authority said on Wednesday it would launch a market study into pure protection insurance product sales, amid fears that the design of some commission structures could lead to poor outcomes for policyholders.

The study, set to be launched later in 2024/25, will focus primarily on sale of four specific types of products – term assurance, critical illness cover, income protection insurance and whole of life insurance.

Pure protection products are designed to help individuals and their families manage their finances if the policyholder was unable to meet their financial commitments, typically through illness or death.

“Pure protection can offer peace of mind and financial security, often when people are at their most vulnerable. Consumers should be able to buy products which meet their needs and provide fair value,” Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said.

“We have seen indications that this may not be the case across the pure protection market and we will act if we find that the market is not working well.”