The draft life assurance disclosure regulations are currently undergoing legal drafting in the parliamentary draftsman's office. They will be based on a specific enabling provision in the Insurance Bill, 1999, which is due to be published later this year.
The essential rationale behind the proposals is to rectify the failure within the market as a whole to provide adequate information to the consumer in the marketing and selling of life assurance products and, as a by-product, to generate more competition among suppliers of insurance.
The up to date situation with regard to the disclosure regulations remains fundamentally unchanged from my comprehensive responses to parliamentary questions on this matter on 9 March 1999 and 21 April 1999.
The prime objectives in the formulation of the disclosure regime will be to simplify the presentation of such products to the consumer; minimise the scope for mis-selling, including the churning of policies; ensure transparency of all charges and expenses; identify the principal with whom the insurance consumer is dealing and provide adequate redress through a firm statutory basis.
Information shall be provided in respect of the terms and conditions of the proposed insurance policy, including benefits and options, cooling off provisions, purpose and intention of policy, type of policy, the costs of the policy and the means and duration of payment of premia, and the consequences of early surrender of the policy.
As part of this overall comprehensive disclosure package I will be introducing, for the first time, mandatory disclosure of insurance intermediary remuneration and salesperson's remuneration, as a separate item of disclosure. The thrust of the draft regulations is to ensure, as far as is practicable, a level playing field in disclosure as between the different distribution channels, irrespective of whether institutional or individual.
The achievement of equivalent disclosure across all suppliers is an extremely difficult concept. Nevertheless, the draft regulations provide that in determining illustrations of prospective benefits, all expenses and costs, charges and intermediary and sales remuneration, the insurer, through the appointed actuary, shall take all reasonable steps to ensure that the illustrations are not misleading and are presented in a fair and clear manner.
All the interested representative bodies and parties have been furnished with the draft actuarial guidance notes which will accompany the final regulations and have been given the opportunity to make submissions on their content. The Society of Actuaries in consultation with our Department are considering all observations received and we will take them into account before enacting the regulations, particularly in so far as maintaining the principle of equivalence, which we strongly support.