Dáil Éireann debate -
Tuesday, 26 May 1998

Vol. 491 No. 3

Written Answers. - Insurance Agents.

Liz McManus

Question:

54 Ms McManus asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the recent report of the Consumers' Association of Ireland that insurance agents were charging up to 60 per cent commission on the first year of some policies; the action, if any, she will take to more effectively control these charges; and if she will make a statement on the matter. [12053/98]

Seán Ryan

Question:

128 Mr. S. Ryan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will introduce legislation to make insurance companies disclose commission rates on their policies to the policy holders; and if she will make a statement on the matter. [12146/98]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

I propose to take Questions Nos. 54 and 128 together.

I would remind the Deputies that I gave a very detailed reply to this House on these matters on the 18 February and 26 March last. The draft life assurance transparency regulations are still under ongoing discussion and development. Special industry guidance notes are also in the process of being drafted in order to ensure that prospective policyholders are not misled or provided with distorted projections on returns. It is our intention to ensure that all inclusive and comprehensive disclosure requirements are in operation that will enable insurance policyholders and those proposing to buy life assurance investment products to make an investment decision with full knowledge of all charges, including insurance commissions and comparable salespersons' remuneration, deducted from premium payments.

I believe that the proposed disclosure regime will lead to a re-think by insurers on the traditional practice of upfront loading of life assurance investment policies whereby the bulk of the policyholder's premium payments in the early years is absorbed in commissions and management charges. I understand that some companies, in anticipating the imposition of increased disclosure requirements, are already beginning to spread such charges over the lifetime of the policy. Ultimately, increased competition as a consequence of the implementation of the transparency regulations and heightened consumer awareness should lead to a better value for money product. The Competition Authority, which has ruled on the insurance industry's previous maximum commissions agreement as uncompetitive, is of the view that competition between life assurance companies for increased market share will lead to companies offering reduced premiums to the consumer and that this will, in effect, put downward pressure on both distribution and management charges. The emergence of new products and new methods of distribution for those products will also increase competition in the insurance market. For all of these reasons, I intend to proceed as quickly as is practicable to have comprehensive transparency regulations put in place in the interests of the consumer and in providing the necessary impetus for increased competition in this very important savings and investment area.