A key measure to reform the insurance market has been dropped by the UK's financial watchdog, the Financial Services Authority (FSA), in response to industry feedback and its own research. Critical illness, private medical and income protection insurance cover will now not be subject to a tough new regulatory regime specifically tailored to high risk products.
However, all firms selling these types of insurance will have to disclose "significant and unusual" exclusions to their customers.
In the case of medical insurance customers insurers will have to make clear up-front what types of illness will be excluded from a policy.
The FSA has said that it aims to reduce the likelihood of insurance consumers buying inappropriate cover and improve service standards for handling claims and complaints.
From January 2005 the FSA will become responsible for the regulation of insurance and its proposals will now be consulted upon until 30 September.
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