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Consumer Duties in Insurance Under Scrutiny

The Central Bank of Ireland recently issued an expectations letter relating to consumer protection to life insurance companies. Our Financial Regulation team reviews the findings of a recent thematic review of Unit Linked Single Investment Products, and explains its significance for the life assurance sector.

The Central Bank of Ireland (CBI) sent a “Dear CEO” letter titled: “Thematic Review on the Ongoing Suitability of Long-Term Life Assurance Products” to the life assurance industry in early August 2023. In the Letter, the CBI detailed its findings following a recent thematic review it conducted on Unit Linked Single Investment Products.

We provide a brief overview of the findings from the CBI Review and its expectations for the life assurance sector.

The main objective of the Review was to assess and understand the structures and processes that exist within life insurers. It also aimed to evaluate the wider life assurance sector to ensure that consumers receive an appropriate level of protection and that their best interests are protected.


The Review was conducted over two phases and comprised of engagement with five of the main domestic life insurers and a sample of intermediaries.

Key findings

  • Distribution Arrangements and Periodic Reviews: The Review highlighted that insurers may not be assessing their product range often enough to be able to identify when a product has become less suitable, or entirely unsuitable, for its customers.
  • Ongoing Responsibilities: Where there are other entities involved, eg intermediaries, banks, etc., the CBI identified that there was a risk that ongoing suitability assessment may be overlooked. This risk may be due to a lack of clarity relating to the allocation of responsibilities between the insurer and the other entities concerned.
  • Continuity of Service: The Review found that when an intermediary has exited the market but not sold/transferred its book of business to another intermediary, the ongoing responsibility for their “orphaned clients” is generally taken on by the relevant insurer. The CBI is concerned that this market practice could give rise to a reduced level of ongoing service provided to orphaned clients, specifically regarding ensuring the suitability of their products.
  • Information in Annual Statements: The CBI is concerned that insurers provide varying levels of information in customers’ annual statements to highlight the importance of ensuring the ongoing suitability of long-term products.
  • Access to information: Although the Review was focused on single premium bonds, the CBI expects that, where possible to do so, consumers are provided with similar access to information relating to all other savings, investment and pension products. Where it is not possible to provide similar access, the reasons why should be clearly documented, and the decision approved at an appropriate level in the insurance firm. In addition, the CBI expects that any such decision should be reviewed on a periodic basis.
  • Suitability of long-term investment funds: The CBI found that in periods where the returns on certain funds are low, the fees and charges that are still being taken from the value of the investment will further reduce any growth. This could potentially lead to an overall reduction in the fund value. This has raised concerns about the maturity of some insurers’ Consumer Protection Risk Management Frameworks.

CBI expectations

The CBI has expressed its expectation that the industry must do more to demonstrate the ongoing suitability of long-term products for consumers, including:

  • Insurers must strengthen their structures and processes to ensure that their consumers’ needs are considered on an ongoing basis, throughout the full lifetime of the product.
  • Insurers should be more proactive in encouraging and empowering their consumers to engage with their financial services provider on matters relating to their long-term policies. The CBI expects that consumers are provided with up-to-date access to their own investment and policy-related documentation.

Insurers must ensure that consumers do not remain in funds that are not appropriate for long-term investment, for a prolonged period, without valid, documented justification.


The Letter is a reminder to insurers that their responsibility extends throughout the full lifecycle of the product. As highlighted, consumer suitability for long-term investment products can change over time. This can impact how consumers are protected in the changing economic environment.

Insurers will need to objectively assess the effectiveness of their Consumer Protection Risk Management Frameworks against the requirements that are set out in the Letter and take any necessary action to ensure the CBI’s expectations are met.

If you have any questions in relation to the Letter, please contact a member of our Financial Regulation Team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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