Long-term Insurance Contracts - Joint I.P.A

This notice is for general information. It is not a substitute for legislation and should therefore be read in conjunction with relevant legislation in each case.

Questions have recently arisen over the provision of advice on and/or sale of long-term insurance contracts, and which types fall under the remit of which regulator (the Financial Supervision Commission and/or Insurance and Pensions Authority – herein the “FSC” and “IPA” respectively).

This notice clarifies the general position.

In general, long-term insurance contracts with an investment element (or which can be converted to having an investment element) are classed as investments under the Regulated Activities Order 2011 and therefore the giving of advice on and/or arranging deals in these products falls within the FSC’s remit as Class 2 Regulated Activity (Investment Business). Examples of such contracts include any that may have a surrender value of an amount (however small) that exceeds the premiums paid, endowment assurance, etc.

As things currently stand, long-term insurance contracts without an investment element, sometimes referred to as ‘pure protection products’, are treated as general insurance business and therefore intermediation in relation to these products falls within the IPA’s remit as an activity requiring registration under the Insurance Act 2008. Examples of such contracts, provided there is no investment element, include level term assurance and decreasing term assurance, permanent health insurance, etc.

Following discussions between the regulators, and in order to avoid unnecessary duplication of regulatory oversight, the IPA will soon be issuing for consultation a proposed, limited exemption which would enable those persons licensed by the FSC to give advice on and/or arrange deals in long-term insurance contracts which contain an investment element, to be exempt from the requirement to register as a general insurance intermediary with the IPA to carry on intermediation activity in relation to long-term insurance contracts. However, the IPA will still remain the responsible regulator for this activity as the residual powers under the Insurance Act 2008 would enable it to subsequently remove any such exemption and take regulatory action.

Any other intermediation in relation to general insurance business will still require registration with the IPA, such as annual medical expenses insurance and other annually renewable contracts.

Anyone who is concerned that they may not be appropriately licensed should contact the relevant regulator as soon as possible.


Alan Rowe or Wendy Sayer
Insurance and Pensions Authority
Tel: 01624 646000


Shirley E Corlett
Financial Supervision Commission
Tel: 01624 689323