Just as the popular AMC television series closes its fourth season, its coverage equivalent is now under attack.
Zombie insurance has been making headlines, not because it has any relation to the popular post-apocalyptic horror drama from AMC, or the “walking dead” that has given the show its name.
Instead, it is central to insurance news as consumers and regulators combat pricing discrepancies.
The Financial Conduct Authority (FCA) in the United Kingdom has indicated that while new customers are being offered better deals, loyal policyholders who have been paying premiums for a long time are often those with the most expensive policies. These zombie insurance policies are costing the industry as life insurers place all of their focus on obtaining new customers instead of working on making sure that people who have been with them for decades would be able to obtain a competitive deal.
A zombie insurance investigation is now in the works to look into 30 million policies.
In this investigation, regulators will be examining about 30 million different policies that have been sold in the United Kingdom by insurance companies from way back in the 1970s, through until the turn of the millennium. The FCA review will look into investment bonds, pensions, endowments, and life insurance.
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This life insurance investigation has arrived at a time in which concern is being voiced over the lower priority that is given to loyal policyholders, while new customers receive discounts and incentives. There is a belief that the longer a person has had their life insurance with a specific company, the more likely they are to receive substandard service and have to face higher fees.
The fear of the FCA is that unfairness is present, in which some life insurers could use the returns that they are receiving from the zombie insurance funds in order to be able to pay the expenses that accumulate from other parts of their businesses. This inquiry was included in the authority’s annual business plan for the upcoming fiscal year, which was published on Monday. It will also be looking into the practice of using exit fees in policies, in order to slash the value of a policy in half if an existing customer attempts to change insurers.