More transparency is needed in the life assurance industry where anti-consumer practices appear to be endemic, according to the Consumers Association of Ireland. It is calling for greater accountability in the sector and the appointment of a "tough" central regulator for the entire financial services industry, along the lines of the British model.
"The financial services industry is too important to be run by an inner circle of business executives with free access to senior civil servants beyond the gaze of an unknowing public," the CAI Council says in the September issue of Consumer Choice.
It says the results of the present system include "hidden charges, high costs, shoddy practices and, in some instances, criminal activity".
The CAI describes churning which involves persuading policy holders to cash in existing policies and take out new ones, resulting in a whole year's premiums going toward sales and management commissions as theft.
It also notes that between 16 per cent and 20 per cent of every penny passing through the industry is absorbed in middlemen costs. It accuses the insurance industry of only being concerned with sales.
It calls for the full disclosure in cash terms at point of sale of the amount of money the insurance company is taking and the split between sales commission and sales remuneration.
