The financial regulator Bafin is warning insurers to get excesses in commission levels under control. “Otherwise there will be something like a commission ban or a commission benchmark that is less liberal,” warned Bafin boss Mark Branson at the Süddeutsche Zeitung’s insurance day in Bensberg near Cologne.
In the course of the introduction of the European retail investor strategy, EU Commissioner Mairead McGuinness was unable to push through her demand for a complete ban on commissions. But the issue could come back on the agenda if insurers don’t take action.
German regulators have long criticized the high costs of life insurance, especially unit-linked policies. “There has to be movement,” demanded Branson. “Too many people have made too much money from this for too long.” Above all, high distribution costs are a thorn in the side of the regulator. Bafin fears that insurers will use high commission payments to incentivize intermediaries to recommend the policies that bring them the most money – and not the contracts that provide the greatest benefit for customers.
Bafin had already announced last year that it wanted to take a closer look at insurers whose policies are among the most expensive 25 percent of the market. “We checked six companies in the first wave, and now four more have been added,” said Branson. In a first case, the supervisory authority also implemented changes that would benefit new customers. However, Branson did not want to reveal which insurers were involved.