Dáil Éireann debate -
Thursday, 24 Jun 1999

Vol. 507 No. 1

Written Answers. - Life Assurance Disclosure Regulations.

Trevor Sargent

Question:

40 Mr. Sargent asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the view that the disclosure regulations will result in fewer insurance and pension policies being sold with less advice in view of the fact brokers will lose out to direct product producers; and the plans, if any, she has for further discussions with financial consultants on new life assurance disclosure regulations. [16167/99]

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

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 introduction of similar disclosure provisions in the UK in 1995 resulted in a significant increase in market share for the independent insurance intermediary sector.

The up to date situation with regard to the draft life assurance disclosure regulations remains fundamentally unchanged from my comprehensive responses to Dáil questions recently. The whole thrust of the regulations and the support ing actuarial guidance notes is to ensure, as far as is practicable, a level playing field between 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, the insurer shall, in determining illustrations of prospective benefits, expenses, costs, charges and intermediary and sales remuneration, through the appointed actuary, take all reasonable steps to ensure that the illustrations are not misleading and are presented in a fair and clear manner.

Currently, there is no mechanism for uncovering the insurers in-house expenses and charges nor remuneration levels to salespeople, all of which impact on the cost of life assurance products and investment returns. On the other hand, it should be possible, on request, to discover the proportion of premium attributable to insurance intermediaries commission. The disclosure regulations will provide for mandatory disclosure, for the first time, of insurers expenses and charges including management fees and an element which represents the cost of emoluments and other payments, benefits and services in the case of salespersons which are equivalent to insurance intermediaries remuneration. The guidance notes produced by the Society of Actuaries in consultation with the Department, which will accompany the disclosure regulations, have identified such elements on a commission equivalent basis so as to avoid unfairly discriminating against the disclosure requirements for brokers and other insurance intermediaries. All of 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 my Department, is considering all of the observations received which will be taken into account before enacting the regulations, particularly in regard to strengthening the principle of equivalence.