Dáil Éireann díospóireacht -
Thursday, 8 Jun 2000

Vol. 520 No. 5

Written Answers. - Insurance Industry.

Richard Bruton

Ceist:

101 Mr. R. Bruton asked the Tánaiste and Minister for Enterprise, Trade and Employment if she has received representations (details supplied) with regard to the proposed disclosure regulations which give excessive attention to commission within the overall charges on insurance policies, and whose effect will be to favour tied agents who do not offer independent advice to consumers; and if she will make a statement on the matter. [16214/00]

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

In drafting the disclosure regulations on life assurance policies, the precise format of which cannot be finalised until after the final enactment of the Insurance Bill, prior extensive consultations with interested parties were held. Further views and observations continue to be entertained, so I am aware of the views referred to by the Deputy.

There are sound reasons for compulsory disclosure of commission levels to consumers. In general, disclosure enables consumers to make an informed and rational choice of products available, thus leading to enhanced competition to the benefit of the consumer. Disclosure of commission should therefore exercise a downward pressure on the levels of commission. It should also minimise the scope for mis-selling, including churning of policies. Moreover, disclosure of commission is becoming the norm throughout the financial services sector. Under the Investment Intermediaries Act, disclosure of commission is required.

In recognition of the observations from representatives of independent advisers, our Department sought the expert assistance of the Society of Actuaries to frame the disclosure regulations in such a way as to avoid unfairly discriminating between commission disclosure by brokers and other insurance intermediaries, on the one hand, and disclosure of remuneration for salesforces employed directly by the insurers themselves or through tied agents such as banks and building societies, on the other. A formula has been devised with the co-operation of the Society of Actuaries, which will achieve equivalence of disclosure, as far as is practicable, between the different distribution channels.