The scope of this year’s Financial Conduct Authority (FCA) market study will not include private medical insurance (PMI), business and key protection insurance, or accident, sickness and unemployment insurance (ASU), according to the terms of reference published today.
Funeral plans and insurance products with a savings or investment element will also be outside the scope.
The market study will look into the distribution of pure protection products to retail customers.
The FCA said it expects to publish an interim report with its initial findings and proposed next steps around the end of 2025.
The FCA explained that it believed there were significant differences in the provision and distribution of the products that fall out of the scope, as well as distinct competition issues compared to the pure protection products that were included in the scope.
The protection products that fall in the scope includes the activities of reinsurers, portals, product comparison platforms, and lead generators.
The FCA also said it had expanded the areas under consideration for its pure protection market study to include restricted panels of insurers used by distributors’ cover for customers who have pre-existing medical conditions and barriers to innovation and investment.
Business and key person insurance
The FCA confirmed that it was not planning to examine distribution arrangements for group policies and business and key person insurance within the market study.
“We understand that different distribution arrangements apply to these compared to individual pure protection policies,” it said.
“Additionally, these products are likely to have a separate set of competition concerns, which would be difficult to explore within the confines of this market study.”
PMI
On PMI, the FCA explained: “We also do not intend to examine the distribution of private medical insurance, which, although it may be sold alongside some pure protection products, has different manufacturers, distributors, and distribution arrangements compared to the products within the scope of the market study.”
ASU and funeral plans
On funeral plans and accident, sickness, and unemployment products the FCA said: “While these may address a similar need for some customers as guaranteed acceptance over 50s insurance and income protection, they are different products with distinct distribution methods.”
On funeral plans the FCA also noted that it will recognise that distribution of over 50s often targets a similar customer need.
The FCA previously said it would not be ruling out banning or capping loaded premiums on protection products and has admitted it ‘has concerns’ in the protection market.
Last year the FCA stated that its review into the operation of the pure protection market would include commission structures including loaded commission and the shrinking insurer market.
And last year the FCA also told Health & Protection said it would be collecting fair value data from pure protection insurance providers.