The Government is relying on voluntary disclosure from the insurance industry because so far it has failed to sign into law regulations compelling disclosure.
The Department of Enterprise, Trade and Employment is citing "technical issues" for the failure to enact enforceable regulations set out in the Insurance Act 2000. Minister of State at the Department, Mr Noel Treacy, has not yet signed the regulations, but a spokeswoman said yesterday they would be introduced shortly. Mr Treacy was not available for comment. The other provisions of Insurance Act 2000 came into force on January 1st. The spokeswoman attributed the regulations delay to some technical issues.
The Department has been pressing insurance firms and intermediaries, including insurance brokers, to agree to the disclosure of relevant information to customers buying life assurance policies for some years. The Consumers' Association had actively sought disclosure to protect consumer interests.
The regulations put the obligation to provide the required information on anyone who sells a life assurance policy to a customer.
Just before Christmas when the Insurance Act was passed, the Department approached the Irish Insurance Federation, which represents insurance companies, seeking voluntary compliance with the disclosure rules until the provisions were signed into law. The insurance firms agreed.
The new rules apply to all types of life assurance policies including serious injury, disability, regular savings, lump-sum investment and pension policies. Certain key information must be provided to every life assurance customer and it must be provided in a standard format. Customers will be asked to sign a declaration confirming they have received it.
Details the seller must disclose include the type of policy and how it works, the charges involved, what happens if customers cash policies early or stop paying premiums, if returns are guaranteed, if the premium will be reviewed during the term of the policy and whether the policy can be amended or cancelled by the insurer.
Charges, which include commissions and other payments to brokers, will be shown in the second of two tables which customers will receive with the other information about the policy. The charges shown will include cash payments as well as non-cash incentives and other support to the broker, which will be given a monetary value. This table intends to show the customer how much the insurer pays the salesperson for their policy. The other table customers receive will show estimated future values of the policy at the end of each of the first five years and then at five-year intervals. It will allow the effect of charges, future investment growth and taxation.
The two tables must be given to customers before they sign an application form.
