The company has been trialling an impaired life annuity, which offers an enhanced rate based on an individual’s medical condition, with a small number of advisers since 2007. Axa admitted this week that it will not be launching the product until there is more clarity surrounding the European Union’s proposals.
Axa said increases in capital requirements and company valuation reporting, which will be enforced through the EU’s Solvency II legislation from 2012, could force a re-pricing of annuities. Some insurers have estimated that rates could fall by up to 20%, although many are claiming it is too early to predict what the true outcome will be.
Media reports earlier this week suggested the company had exited the market altogether, but Axa maintained it is capable of competing in the sector, which is currently dominated by the likes of Just Retirement, Aviva and LV.
A spokesman for the Association of British Insurers said it remained hopeful of agreeing the wording of the Solvency II agreement before 2012 so that it would be beneficial to both insurers and consumers across the continent.
PM will publish a survey of the enhanced/impaired annuity market in May’s issue.
