Swiss Re keeps options open, despite market speculation
The price of guaranteed critical illness (CI) premiums could fall in the future if Swiss Re decides to continue to provide guaranteed rates, an industry expert has argued.
Last month, Swiss Re announced the completion of its acquisition of GE Insurance Solutions, revealing that treaties currently open to new business will remain open - including guaranteed CI policies.
This move has reignited speculation that the reinsurer may be looking at returning to the guaranteed CI market on a more permanent basis.
If that is the case, the industry could see lower guaranteed rates, believes Kevin Carr, head of protection strategy at LifeSearch.
"Our understanding is that Swiss Re will certainly be honouring all existing arrangements for guaranteed rate CI cover and may consider providing further capacity in future, depending on how the market moves. If this happens, then the market could begin to see prices fall a little," he said.
However, Tim Dickenson, head of UK communications at Swiss Re, refused to be drawn on whether it will return to the guaranteed CI market for good and, if so, whether it would affect the pricing of premiums. "We will keep treaties currently open to new business open. If we are presented with opportunities for new treaties, we will consider them on a case-by-case basis at individual client level," he said.
He added, however, that he could not comment on future pricing of guaranteed CI.
He concluded: "As always, we will monitor the performance of all business on an ongoing basis and make any necessary changes to terms and conditions in the light of emerging experience and best market practice."
Advisers are pleased Swiss Re has left its door ajar to the guaranteed market. Jason King, managing director of Torquil Clark Life Insurance, said: "We are very pleased that Swiss Re seems so positive on this subject. GE has been the only major provider of reassurance to the guaranteed CI market.
"Following the sale of GE, if Swiss Re had decided to remain out of this market then it would probably have marked the end of guaranteed rate CI as we know it, and we would then have perhaps started to see some of the long-promised next generation CI products start to appear."
He added: "So, in a perverse way this 'commitment' to guaranteed rate CI by Swiss Re has probably stifled CI innovation in the IFA market."
Swiss Re pulled out of the guaranteed CI market in 2003 claiming that medical advances and maturing books meant such rates were becoming unsustainable. In the meantime, GE has been one of the biggest providers of guaranteed CI.
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