The sales commissions for life insurance policies often cause criticism. © Jonas Walzberg/dpa
The costs of life insurance are always the subject of discussion. Now the financial regulator Bafin wants to control the companies more closely.
Frankfurt/Main – From the point of view of the financial supervisory authority Bafin, the classic retirement provision life insurance should offer appropriate customer benefits. The authority wants to put a stop to excessive costs. "It's about preventing or stopping excesses in commission-based sales," said Germany's top insurance supervisor Frank Grund on Monday. Conflicts of interest in the distribution of these products should be avoided. Consumer advocates are a thorn in the side of the commissions for the classic retirement provision.
Bafin: Leaflet for life insurance
The Bafin published a leaflet on Monday. According to this, life insurance companies must achieve return targets with sufficient probability. When setting these targets, insurers should distinguish between a positive return after cost (nominal) and a real success, i.e. a positive return after cost and inflation. False incentives in sales are to be avoided by means of sales remuneration requirements. In an investigation, the supervisory authority had found a "considerable spread", in particular in the distribution costs of life insurers.
The supervisory authority is taking a closer look at insurers in particular, where the effective costs for endowment life insurance policies are very high compared to the rest of the industry. The effective cost indicates how the cost of the respective contract affects the return. Insurers, whose expenses for intermediaries are conspicuously high, are also examined more closely.
"The leaflet is an important building block for our supervision of providers of endowment life insurance products," said Grund. "Because in addition to auditing individual companies, it is important to communicate our expectations to the industry."
Insurance: Consumer advocates call for a ban on commissions
Consumer advocates are calling for a ban on acquisition commissions paid by insurance companies to insurance agents and brokers for brokering life insurance. The interest rate on the classic retirement provision only refers to the savings portion after deduction of acquisition and administration costs, among other things.
Most recently, a ban on commissions for financial products was up for debate in Brussels. However, EU Finance Commissioner Mairead McGuinness recently said that other measures, such as transparency obligations, should be considered instead of a ban on commissions in order to increase consumer protection. Even if there is no ban on commissions, this does not mean "a free pass for the financial sector". The Commission plans to present details of its retail investor strategy at the end of May.
There had been great resistance from the financial sector to the EU Commission's plans for a ban on commissions. Consumer advocates criticized the decision. "For customers in the financial sector, this means that it is mainly sold and not advised. Commissions and conflicts of interest remain part of everyday life," said Britta Langenberg, consumer protection expert at the citizens' movement Finanzwende. (df/dpa)
