It is expected to take a softer approach in a second report to be published in the spring.
The new report will look at “benchmark specification and check the arguments against a ban on moratoria in all circumstances.”
Speaking at a conference on insurance in London, Geoffrey Horton the OFT’s director of consumer affairs said: “We are listening to the arguments and taking into account the views of health insurers.”
An outcry from IFAs and health insurers followed the OFT’s earlier report.
Many claimed the public was not disadvantaged by moratoria and that the underwriting approach would exclude many from becoming policyholders.
It was claimed few complaints are received from customers and it gives the chance of enhanced cover.
Horton admitted: “We were told that customers like moratoria and that banning it would stifle innovation,” he said.
But he also denied the OFT was backtracking on its earlier views. “We do not want to ban anything,” he commented.
He added that since the OFT report, many health insurers had made efforts to improve their marketing literature, making it clearer for policyholders to understand.
The OFT recommended consumers should be warned that PMI premiums tend to rise above the retail price index.
A further recommendation from the OFT was to use actual case studies in advertisements and marketing literature.
Use of misleading health statistics in marketing was strongly discouraged.
But Horton was sceptical about the benefits of long term care insurance.
On asset protection products he commented: “There will not necessarily be better care as a policyholder as a result of these, but they will stop the state taking away so many assets.”
He continued: “The problem for people is they do not know what type of regime will be in place when they get to the stage of needing care.” The OFT has argued for regulation of the long term market.