Life Insurance – New guidelines lead to complications

With new policy guidelines being brought into the insurance market, prices are set to increase but how does this affect you as the consumer?

Financial Services Authority

New, strict guidelines are being enforced on the insurance industry which prevents any firms not registered with the Financial Services Authority from trading. These have been brought in as an effort to protect consumers from purchasing too much or too little cover.

Policy Outlines

Part of these new guidelines includes firms legally having to outline the ins and outs of their policies in order to prevent confusion for the consumer. Life insurance is vital, should the worst happen, therefore it is essential to know exactly what you are buying. This therefore highlights that the new insurance guidelines should be of benefit, however, enforcing them is a costly process for insurance firms as a whole.

How will this directly affect insurance costs?

Insurance firms will be looking at other ways of paying for these increased costs rather than it coming directly out of their profits. However, it is very difficult to tell if the cost of implementing these regulations will be directly linked to cost of life insurance, house insurance and the other products offered by the insurance firms.

Firms awaiting the ‘green light’

Firms who are waiting to hear whether they well be granted acceptance by the FSA have been allocated an interim stage however, it has been said that customers of these firms may not be entitled to compensation if these firms were to go under.

Further complications

It has also been noted that travel insurance policies bought through the travel agents are not covered by the FSA as well as the fact that more detailed and complicated policies such as life insurance could now be put on a level playing field with more basic policies such as motor insurance. This could jeopardise peoples choice making when buying policies, putting them at risk of making the wrong decisions.