Insurers told rules must be respected

THE Minister of State for Commerce, Science and Technology, Mr Pat Rabbitte, has warned the insurance industry to respect statutory controls on commissions.

He said his Department was examining suggestions that some rules were a disincentive to new technology but, while statutory controls on commissions in employers' liability, public liability and motor and household insurance existed, they should be at the Irish Insurance (IIF) annual lunch.

Mr Rabbitte said: "Representations have been made to me and my Department by both insurer and intermediary interests in relation to these controls.

"Most recently these representations suggest that the existence of the controls is acting as a disincentive to the adoption of certain technologies. This is something my Department has been examining.

"However, in the meantime, I would like to make it clear that so long as the controls do exist, I would expect the industry to respect the legal requirements in this area.

"I could not countenance practices that, while they may not reach the letter of the law, are contrary to its spirit."

He said his Department had sought legal advice about the statutory controls on commissions and this would be passed on to the IIF.

There did not seem to be any reason why the increase in direct selling of insurance in Britain would not be mirrored in Ireland.

He warned that this would have implications for insurers and intermediaries.

"Direct writers have taught traditional writers the value of technology," he said, adding that the insurance industry in general has been slower than it might have been in coming to terms with the benefits of technology.

The Minister was also critical of the use of misleading jargon in the industry and said it was time for statutory requirements on the disclosure of information on the marketing of life and non life insurance products.

"Consumers buying a product or service want to know what they are getting for their money." He said his Department was working on draft regulations to require all insurance sellers, domestic and foreign, to give consumers the required information to make informed choices.