Shake-up for a fair game
Article Abstract:
The UK Office of Fair Trading (OFT) has put forward three proposals regarding information disclosed to life insurance buyers before they make any purchase to encourage competition. The first recommendation is the disclosure of the surrender value of a life assurance policy not just in the first five years of its term but also for its entire life. The second is the declaration of the impact of life office chargesand costs in the illustrations of future investment returns. The third is the disclosure of commissions of independent financial consultants, but not tied agents, from life offices. A group of life insurers, called the Watford Group, is advancing an alternative approach that requires writing business on a recurrent individual premium basis and making policies accessible to distributors on net-of-commission principle. However, this procedure will only tip the distribution balance towards larger financially endowed firms, leaving smaller distributors in the competition.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1993
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Banking on their assurance
Article Abstract:
The core business of the banking industry is increasingly beingused as a marketing tool to sell insurance products to customers. Bank branchesand bank employees are becoming less service-oriented and more sales-focused asa result of huge commissions on referrals. This shift adversely affects customers. For one thing, the range of choices for most bank customers are limited to the products of their banks. These products are usually more expensive and less attractive than the ones in the market. Moreover, high commissions on life products may produce bias among employees towards such policies. This tendency may lead to bad advice and the clients being sold inappropriate products. Lastly, small-business customers are being coerced to buy because loans and overdrafts are being linked to insurance products. To avoid such problems, bank sales staffs should be regulated by the same rules that are used on independent advisers and life insurers.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1993
User Contributions:
Comment about this article or add new information about this topic:
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