The Financial Service Authority's (FSA) proposals for the regulation of general insurance could seri...
The Financial Service Authority's (FSA) proposals for the regulation of general insurance could seriously damage sales in the private medical insurance (PMI) market if they are given the go ahead, writes Kirstie Redford.
This is the stance being taken by PMI broker body, the Assoc-iation of Medical Insurance Intermediaries (AMII), which has decided to air its concerns regarding the consultation paper ' CP160 ' in a formal response to the FSA.
The watchdog is proposing the industry takes a risk-based approach to the regulation of different products. However, the AMII believes classing PMI plans as 'high risk' products ' as proposed in CP160 ' will have a negative effect on sales.
Stephen Walker, specialist PMI broker at Medical Insurance Services and a member of the AMII, is compiling an official response on behalf of the broker body.
'Private medical insurance products have been lumped in the high risk category with investment products such as endowments. The FSA is using the wrong terminology ' if private medical insurance is labelled as high risk, it could affect sales,' he said.
However, Walker feared if the industry pushes for more relevant regulation for PMI products, it may generate extra cost which would have to be absorbed by policyholders.
'It appears the FSA is using existing systems to cut down on costs. If we push for additional specific regulation, it will cost more and will end up being borne by the industry, which will ultimately mean higher premiums for products.'
The official response by the AMII is still being formulated, but is expected to be delivered to the FSA over the next few weeks.
