The management of Irish Life has launched a strong rearguard action to defend its good name after the Magill magazine allegations of sales practices through which customers lost money. But there is little doubt that public confidence in one of Ireland's most venerable companies has been shaken. Most people may not understand the intricacies of `churning' - in which existing life policies are replaced unnecessarily with new policies for the sole purpose of generating commission. But in the current climate, few may be willing to give Irish Life the benefit of the doubt. While the company has insisted that the Magill magazine allegations are "simply not true", the fact that no fewer than 21 sales staff have been dismissed for "gross misconduct" since 1993, will not help to instil public confidence. Neither will the public be much impressed by the tacit admission by management that it allowed policy changes in the pipeline to be processed in July, 1994 - despite knowing that the customers involved could have been worse off a result. Company management argued that it was a grey area in 30 cases processed whether the customer would be better or worse off.
In fairness, it may be that Irish Life is by no means the worst offender in the insurance industry. The company is entitled to some credit for taking such strong action against rogue salesmen. It is clear that it has worked assiduously to tighten up procedures and to monitor the sale of policies in the past four years. This is, of course, no more than might be expected. In an industry where commission is so lucrative, there is a clear onus on each company to ensure that its customers are not exploited.
For all that, it is abundantly clear that something more than internal action is required. Irish Life, and the wider insurance industry, clearly need stronger and more independent policing. The current situation in which an Insurance Ombudsman nominated by the industry itself acts a buffer between the public and the industry is intolerable. The resignation of Mrs Paulyn Marrinan Quinn - amid allegations levelled by a member of the Insurance Ombudsman Council of "unremitting coercion" by the industry - should have alerted the Government to the need for independent regulation. The allegations surrounding Irish Life make a further compelling case for this. Regrettably, the Minister of State with responsibility in this area, Mr Noel Treacy, has, on the basis of his inadequate response on radio yesterday, failed to appreciate the need for urgent action. A more robust approach - not dissimilar to that adopted by the Tanaiste, Ms Harney, towards the accountancy profession - is required.
Mr Treacy, as a representative of the consumer and public interest, has a responsibility to ensure full accountability and transparency by the industry. The establishment of a fully independent regulatory system, along the lines of the tough British model, is an obvious first step. The Department of Enterprise and Employment, which adopts a laissez-faire approach towards the industry, would also do well to adopt a more pro-active approach. Closer scrutiny of market conduct in the industry, along the lines of the British model, would better serve the public interest.