• Do insurers abide by laws regulating the insurance business?
• Do insurers research their customers' needs? Do they retain most of their customers' savings when they decide to terminate the agreement?
• The president of UOKiK has been conducting proceedings against: Axa Życie, Vienna Life, Generali Życie, Open Life and MetLife.

The Office of Competition and Consumer Protection (UOKiK) is once again scrutinising life and endowment insurance combined with an insurance capital fund (ICF). This time we want to establish whether insurers observe the law on the insurance and reinsurance business.

The regulations that came into force on 1 January 2016 allow for the resignation from some investment products within 60 days from the first reception of the so-called “anniversary information”. The insurer sends it 10 to 14 months after the conclusion of the contract. If the customer resigns, the funds can be reduced by a maximum of 4 percent.
"A few years ago, high termination charges were a reason for our concern as customers used to lose most of their savings. UOKiK's efforts reduced costs for people who signed contracts before the end of 2015. Since the law went into effect we have been inspecting whether insurers observe it. For example, whether they continue to retain most of their consumer's money under various names when he or she terminates the ICF agreement. According to our findings, some of them could have introduced fees under different names in order to discourage consumers from terminating the contract," says the President of UOKiK, Marech Niechciał. The presence of provisions under which insurers keep most of the money contributed by customers in the initial years, offering policies that are not suited to the consumers' needs as well as practices that may imply misselling are all causes for concern.

Abusive clauses

The president of UOKiK has been conducting proceedings to examine clauses based on which insurers often retain a larger part of the customer's contributions paid in the initial years of the insurance contract. Insurers collect a high percentage of the money contributed by the consumers as the entry, allocation and distribution fees. Thus the consumer incurs unreasonably high costs. "The result of those fees is identical to the termination fees that the UOKiK has already contested. They make it impossible to terminate the ICF agreement when someone needs the money," Marek Niechciał believes. The proceedings to declare the clauses abusive are underway. They concern the following insurers: AXA Życie, Vienna Life na Życie Vienna Insurance Group, Generali Życie and MetLife. If the clauses are declared unlawful, the entrepreneurs will no longer be able to use the contested provisions. The maximum penalty for applying unlawful clauses may reach up to 10 percent of the company's turnover.

Violation of collective consumer interests

Insurance companies are obliged to survey the financial needs, knowledge and experience in life insurance of a person who wants to enter into an insurance agreement combined with an investment fund. If this leads them to the conclusion that they cannot offer insurance that would be suitable to the consumer's needs, they should inform him or her about it in writing, and in such a situation the agreement may be concluded only upon a written request from the insured. Information and documents accessed by the UOKiK show that Open Life TU na Życie could be offering consumers insurance that is not in line with their needs as specified in the questionnaires. For example, it may be offering too long contract periods (compared to the needs stated by the consumer) or products that are more risky than stated in the consumer's declaration. In the case of one contract that the Office has seen, the customer expressed interest in a 10-year agreement at the longest, while Open Life TU na Życie offered them an agreement lasting until the insured reached the age of 85. The proceedings against Open Life TU na Życie may end in the imposition of a fine reaching up to 10 percent of the company's turnover and an injunction to stop the practice.

UOKiK and ICF

So far, the UOKiK president has issued 23 decisions on unfair sales of ICF policies:

• in 2013 and in 2014 – 6 decisions with penalties totalling PLN 57 mln
• In 2015 and 2016 - 17 decisions with no penalties as the insurers undertook to lower the termination fees

The Office also signed agreements with 17 insurers. They lowered the termination fees for those customers who had not been covered by the UOKiK's earlier decisions, also affecting senior citizens.

“Although we have issued many decisions and signed agreements on the ICF, we can still see the need to make this market more orderly. New doubtful practices and clauses continue to appear. We do not rule out action against other insurers. The ICF issue is still open for us," says Marek Niechciał. 

Additional information for the consumers:

Phone 801 440 220 or 22 290 89 16 – consumer helpline
E-mail: porady@dlakonsumentow.pl
Branches of Consumer Federation
Consumer ombudsmen – in your town or county

Contact for the media:

UOKiK Press Office
pl. Powstańców Warszawy 1, 00-950 Warsaw
Phone: +48 695 902 088
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL