Both products — which are essentially offshore bonds packaged and sold with life insurance coverage attached — will be maintained for existing clients, with all of the options and facilities, including top-ups, continuing, Prudential International said today.
In a statement, Prudential said the review of its product range had been conducted in response to the need to be prepared for the implementation in January 2012 of the Retail Distribution Review (RDR). The decision to close the FPB and FLP products to new business had been “further influenced” by a 2011 European Court of Justice ruling in the so-called Test Achats gender-neutral pricing case, the company noted.
As a result of that case, which was brought by a Belgian consumers’ association, insurance companies operating in the European Union have until 21 Dec 2012 to ensure that none of the new insurance contracts they issue make use of gender as a means of determining the premiums policyholders are required to pay, or the benefits they will receive.
Taking the new requirements of both the RDR and the Test Achats ruling into account, Prudential International said, “we have decided that the current products are not the right propositions for the market in 2013.
“We will continue to research opportunities to bring new products in the future that are specifically designed for the needs clients and their advisers in the post-RDR environment.
“Prudential International will continue to support the adviser market with its core products, [the] International Prudence Bond and Portfolio Account.”
‘Niche’ products
According to Steven Whalley, head of investment marketing at Prudential International, the FPB and FLP were "niche" products, offered through the company’s Dublin operation and sold exclusively in the Uk, with an annual single premium turnover of less than £100m in 2011. It was their life insurance component that caused them to be in conflict with the new post-Test Achats case rules in Europe, he added.
The single premium FPB and the regular premium FLP were originally introduced in the 1990s by Scottish Amicable, the insurer acquired by Prudential a few years later.
