Irish Life is carrying out a second review of 805 insurance policies sold in 1994 to ensure that customers were not given inappropriate investment advice by the company's salesforce.
The company has dismissed 10 salespeople out of its salesforce of 400, in the past decade for inappropriate selling practices, a spokesman said yesterday. The practice involved advising people to cancel policies and take out new policies.
Known as "churning" in the industry, the practice generates double commission for the salespeople involved, but usually results in losses for customers and for the company.
A review of the policies was carried out in 1994 following evidence of a significant increase in the number of policy surrenders and rewrites, the company spokesman explained. Between January and June that year there were 805 cancellation and rewrites against a normal level of about 100.
"There would be no motive for the company to condone this type of behaviour. Insurance companies have to guard against it. Persistency is one of the measures of success (how long people hold on to policies). We set up systems to identify and respond to the situation. Where inappropriate advice was identified we have compensated customers and taken action against the salespeople to demonstrate to our customers that they can rely on our sales team."
The spokesman could not say how many of the 805 policies investigated in 1994 were missold or how many salespeople were dismissed as a result of that review. Asked why a new review had been ordered he said there had been no complaints from customers "but in the climate at the moment the company wants to ensure that the cases were thoroughly evaluated", he said.
In addition to this review the first stage of another major review to ensure customers were sold policies appropriate to their needs has just been completed. Some 38,000 policies have been examined and customers have been facilitated to switch to more suitable policies where appropriate. This review, described as "prudent customer care", arose out of widespread dissatisfaction with policies and will cost Irish Life about £10 million.
Mr John Tierney of the MSF union which represents Irish Life sales staff said the company was the first to introduce practices to protect the customer.
