Irish Life is taking 43 insurance brokers and their partners to South Africa on an incentive trip which will cost the company almost £500,000 (€634,869). The party will fly to Cape Town on February 21st for a four night holiday which the company yesterday described as "an incentive to reward outstanding performance".
Confirming the planned trip, an Irish Life spokesman insisted that the company would follow the letter and the spirit of the new commission disclosure requirements with regard to the trip. The brokers involved are aware the trip is fully disclosable under the rules, he said.
However, customers will not be informed about the nature of the travel or the destination.
"There is no question of this not being disclosed to the clients of the brokers involved. Irish Life will make the disclosure to the customers," he said. The company will establish the cost of the trip, divide it between the brokers involved and spread it over the business they place with the company, he explained. The company will establish the monetary value of the incentive to each broker and this amount will be disclosed to customers at the start of the statutory cooling-off period as "non-standard commission" given to the broker, he said.
While customers will be given a total amount for the commission received by the broker selling the life assurance policy to them, they will not be told the form of the "commission". So a customer will not be aware that the broker has taken a trip to South Africa at the expense of Irish Life. The "uplift" disclosure category, or non-standard commission items, includes such company expenditure as advertising to support brokers as well as incentives such as trips abroad.
The revelation that Irish Life is to spend about £500,000 entertaining brokers comes as the Insurance Ombudsman investigates complaints by 14 Irish Life policyholders about review clauses in life policies sold to them in the 1980s. The complaints involve open-ended protection policies, branded under the name Lifesaver. In a recent review one in five of the policies required an increase in premium payments or a reduction of cover.
Mr Paul Carty of the Irish Brokers' Association said incentive trips have been a feature of the insurance industry for some time. Irish Life took a party of brokers to Dubai last year. Other recent broker trips involved New Ireland taking a party and their spouses to Paris and Hibernian taking a party of 24 brokers to Brazil.
Describing media comment on these incentive trips as "much ado about nothing" Mr Carty asked "which is worse or more dangerous: an insurance broker going on a holiday or a doctor being entertained by a drugs company?" But he stressed that expenses or benefits in kind of this nature were required to be disclosed under the new disclosure requirements which are being implemented on a voluntary basis since January 1st.
But a source at a life company which competes with Irish Life expressed annoyance at Irish Life for continuing the "trips for brokers" incentive. While he accepted that his company had brought brokers abroad in the past, he contended that the image created was bad for the industry. He maintained that the new disclosure regime would have allowed companies to stop offering the trips but argued that the Irish Life move meant that they would continue.
