Written Answers. - Life Assurance.
Liz McManus
Ceist:
93
Ms McManus
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
the investigations, if any, held into allegations of churning by a company (details supplied); the results of these investigations; the action, if any, taken as a result; the response she has received from other assurance companies to the letter sent to them by her Department seeking clarification of procedures put in place to guard against mis-selling of policies; and if she will make a statement on the matter.
[21635/98]
Thomas P. Broughan
Ceist:
98
Mr. Broughan
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
to report on her inquiry into allegations of churning at Irish Life plc.
[21151/98]
I propose to take Questions Nos. 93 and 98 together.
The Deputies will be aware that a departmentmental examination was initiated by me on 26 June last into sales practices at Irish Life with particular reference to allegations of "churning" of life assurance policies. The examination, which is ongoing, is to inquire into and to furnish a report on the following:
(a) any evidence, or otherwise, as to the extent and the scope of the practice of "churning" of life assurance policies by salesforce personnel operating in the State on behalf of Irish Life;
(b) the encouragement-endorsement of management, or otherwise, and or the connivance by management, or otherwise, in the practice of "churning" of life assurance policies by the company;
(c) the actions taken by management in the company to prevent the practice of "churning" wherever and whenever it occurred;
(d) the actions taken by management, disciplinary or otherwise, against those involved in the practice of "churning";
(e) the actions taken by management to compensate policyholders suffering losses as a result of "churning" activities; and
(f) the action taken by management to institute appropriate compliance and enforcement procedures to deal with "churning" of policies.
The examination is being carried out under the supervisory and regulatory authority of the Insurance Acts and regulations. I would expect the completed report to make whatever recommendations for future action in this area as are deemed appropriate.
On the question of "churning" generally, I have also written to every life assurance company in the State and insurance industry representatives on the matter. As regulator of the insurance industry, I have sought assurances that where evidence of sharp practice or abuse of customer vulnerability exists in individual companies, it will be dealt with immediately and effectively by company management at all levels. The responses from individual companies indicate that the level of sophistication in uncovering and dealing with malpractice varies from company to company. As a result it is considered that, at least on the question of "churning", a standardised method for detecting and monitoring the problem should be instituted by the industry in general. In that regard, I should like to take the opportunity to inform the House that the parliamentary draftsman's office in the Office of the Attorney General is currently examining my proposals to introduce life assurance transparency regulations. The proposals address consumers' concerns for appropriate disclosure by insurance companies, agents and independent brokers of commission payments and sales remuneration and the risks and benefits associated with purchasing life assurance investment policies. The proposals include such standardised provisions which will make it more difficult for persons to engage in "churning" in the future.
In so far as the specific examination into Irish Life is concerned, given that the departmental examination has not yet been completed, definitive conclusions are not possible at this stage. However, from documentation examined to date, my Department has uncovered no evidence which indicates any endorsement or encouragement of the practice of "churning" by management within the company. Departmental officials are continuing to examine, among other things, internal company audit reports, relevant memoranda, personnel records, complaints records, including processing of insurance ombudsman complaints and the extent of the rectification measures taken to date both at company and policy-holder level.
