The Financial Conduct Authority’s (FCA) Consumer Duty should act as the “ultimate nudge” for insurers to deliver fair outcomes to cohabitees following the death of their partner.
Speaking at the Protection Review’s ProtectX6 event, Insuring Change partner Ruth Gilbert noted more insurers were set to adopt contractual beneficiary nominations within their policies, but said this movement needed to continue.
Gilbert explained that research indicated one in three purchasers of life insurance were not married and that more pragmatic solutions were available to ensure this group were properly directed to death benefits following the death of a spouse.
She added that issues with cohabitees accessing life cover following the death of their partner became more apparent in 2020 in the middle of the pandemic and that the FCA’s Consumer Duty should provide the “ultimate nudge” to deliver fair outcomes to this group.
“What’s more we now have three insurers, and more coming, who have embraced the fact that contractual beneficiary nomination built into life policies is the more pragmatic solution to safely directing the death benefits,” Gilbert said.
“So for 2030 my unsurprising goal is that maybe 90% of single own policies will be written that way with the rest in trusts.
“Whether the industry will be willing to make that happen is down to you.”
Gilbert added that fair value will be tested throughout the distribution chain – meaning it should no longer be possible to play ‘pass the parcel’ with responsibility for this.
“And the FCA has described unfair or poor value as meaning unsuitable futures that can lead to foreseeable harm or frustrate the customer’s use of product,” Gilbert said.
“You can’t get clearer than that but do we want to wait for the FCA to spell it out even more specifically before we fix this?”