ICOB: is a two-tier regime appropriate?

The FSA released a paper last week assessing the level of risk each type of insurance product presents and provisionally placing them into two categories: other general insurance products – motor, household, travel and private medical insurance (PMI); and protection products – term, critical illness, income protection and payment protection insurance (PPI). The regulator believes the level of material market failure in the sale of protection products to retail consumers justifies it applying more stringent rules than to general insurance products, where it says the market “works reasonabl...