There are two pieces of European legislation due to come into force at the end of 2012 which may have an impact on the pricing of insurance products:
EU Solvency II Directive
This European Directive will establish a new regime for the taxation of Life Assurance companies. HMRC’s view is that this supports the Governments policy of simplifying the tax system by bringing the taxation of Life companies into line with other commercial enterprises.
It is envisaged that the changes will:
- Encourage competition in the marketplace
- Encourage product innovation
- Eliminate tax-driven anti-competitive distortions
HMRC do not expect the changes to have any significant economic impact or increase tax revenue. It has been estimated however (by HMRC) that there may be an initial increase in premiums for certain life company products such as Group Life Assurance in the region of 4% – 10%, however this may well be offset by the downward pressure on prices as a result of the increased competition.
EU Directive 2004/113/EC
Currently insurance companies consider the sex of the assured person(s) when calculating risk. The 2004/113/EC European Directive prohibits the use of gender as a factor in the calculation of insurance premiums. This directive will compel insurers to offer unisex rates on all types of insurance.
Life Assurance is currently cheaper for women – they live longer than men on average, and so the probability of death over a fixed period is lower. The new legislation will force an equalisation of the rates, and so the cost of Life Assurance for women may increase, conversely the cost for men may drop.
The reverse it true for health insurance products such as Income Protection and Critical illness. These products are currently cheaper for men – they do not live as long as women and so the duration of an income protection claim could be shorter. The changes could push up the premiums for men and decrease them for women.
We do not know how or when then insurance market will respond to these changes, but it may be wise to take undertake a review of your corporate benefits with ourselves to ensure that you are benefiting from the most appropriate premium for your circumstances.
- Wingate will discuss your circumstances and objectives and identify your specific needs.
- Based on this research we will provide you with a report confirming the options available and our recommendations without cost or obligation.
- If you wish to consider changes to your benefits, we will provide advice on your options
Wingate Benefits Solutions is here to assist you with all aspects of Group Risk Benefits. Should you wish to discuss this or any other such matter please contact your Wingate Benefit Solutions adviser on 0844 406 0027.
Tax and legislation are liable to change. This information is based on Wingate Benefits Solutions’ current understanding of UK law and HM Revenue & Customs practice and legislation. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of the information contained herewith. It is recommended that professional advice is sought prior to entering into any financial arrangement.