Financial watchdog intervenes on overpriced insurance products
Action by the Financial Services and Markets Authority (FSMA) has resulted in hundreds of overpriced insurance products being reduced in price or taken off the market, according to the watchdog’s 2024 annual report.
As a regulator, the FSMA checks whether insurance products offer sufficient value for money and do not cost consumers too much, says chair Jean-Paul Servais. It intervenes if it appears that those costs are too high, and insurers must act.
The agency investigated 178 life insurance policies whose costs were disproportionate and were labelled “suspicious”, said Yves Van Wassenhove of the FSMA. In the case of 137 policies, costs were reduced after intervention by the FSMA, on average by 0.64 per cent. A total of 28 policies were taken off the market by the insurer.
'Highly questionable'
The FSMA also examined non-life insurance products. It mainly looked at how much of the premiums flowed back to the policyholder. If that is too little, the FSMA investigates.
Of the 56 products investigated, 50 were eventually taken off the market by insurers after the FSMA intervened. These were mainly debt balance insurance, travel assistance insurance and all kinds of “exotic insurance”, Van Wassenhove said.
“Think of insurance on the purchase of a mobile phone, invoice insurance or purchasing power insurance. Surely such insurances are highly questionable?”
Meanwhile, the authority is launching an online tool for consumers to compare the cost of their investment funds.
Belgian households had 303 billion euros in mutual funds at the end of last year, more than the 274 billion euros they have in savings accounts.
Investors can now use the FSMA’s website to compare entry and management fees with the market average and see the impact of costs on returns.
“The cost comparator should help people to properly understand the impact of costs on returns,” explains Veerle De Schryver, responsible for fund supervision at the FSMA.
FSMA chair Jean-Paul Servais, January 2020 © BELGA PHOTO JASPER JACOBS
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