Three insurance companies – Polish units  of Aviva, Allianz and Nationale Nederlanden – have committed to significantly reduce cancellation fees in existing policies and to eliminate them from standard contract terms. The commitments were accepted by the Authority as part of ongoing proceedings against several life-insurance companies offering unit-linked products on the Polish market.

Poland’s Office of Competition and Consumer Protection (UOKiK) has charged 17 insurance companies with imposing excessive cancellation charges on consumers to cover distribution costs related to incentivising sales professionals offering the products.

Aviva, Allianz and Nationale Nederlanden were the first of the insurers charged to propose substantial redress to affected consumers. Unit-linked insurance products with cancellation fees would no longer be offered to customers. Additionally, cancellation fees will be significantly reduced for currently held contracts. The Authority accepted the commitments and terminated proceedings against the three companies.

“We accepted the commitments because, in our opinion, they significantly and immediately improve the situation of consumers affected by the high costs of withdrawing from policies,” said Adam Jasser, UOKiK president. “Negotiations with the remaining insurers under investigation are in progress, but we will accept only such commitments where the benefits to consumers will be significant, as in these three cases.”

"I would also like to emphasize that though we are always open to negotiations, they cannot last forever. It would not be fair to consumers and the companies that have already taken remedial action."

UOKiK, the Financial Supervision Authority (KNF), and Poland’s Insurance Ombudsman have been flooded in recent years with complaints from customers about misseling and high cancellation fees related to unit-linked insurance products. Many have complained that polices were sold as risk-free substitute to bank term deposits, while risks and cancellations costs were not properly shown. The market grew rapidly to over 50 billion zlotys (11 bln euros), constituting roughly half of the entire life insurance market.

Last year, UOKiK imposed 50 million zlotys of fines on insurance companies and brokers for misseling such products. The cases are now in appeal. 

UOKiK’s proceedings are accompanied by regulatory reform of the market. New regulations imposing stricter information obligations on insurers are currently being processed by parliament, while the Financial Authority is preparing new guidelines for the sector. 

Andrzej Jakubiak, KNF chairman remarked: “Unit-linked products are highly complex, so it is essential that insurers attach greater importance to fully informing customers about the risks and costs. KNF is currently conducting public consultation of the guidelines for insurance companies on the system of product management as well as research into product adequacy, which will increase the level of protection afforded to consumers.”

Aleksandra Wiktorow, the Insurance Ombudsman, welcomed settlements with the three insures: “We support the commitments made by the insurers and expect other insurers under investigation by UOKiK to follow suit and voluntarily move to help consumers regain savings that in some cases have been collected over their entire lives.”

The commitments in brief:

· Aviva (Aviva Towarzystwo Ubezpieczeń na Życie SA) has committed to withdraw insurance product with the charges in question, and allow consumers to indefinitely annex contracts currently held. In the latter case the liquidation fee will not exceed 15 percent of the funds, or not more than 1,500 PLN. The redemption value will be equal to the value of all the funds less debt from ancillary contracts. The insurer will also inform all consumers who express the desire for early contract termination of the availability of these conditions.

· Allianz (Towarzystwo Ubezpieczeń Allianz Życie Polska SA) has committed to lowering the cost of redeeming a contract to 25 percent of the first year regular premium, or not more than 5,000 PLN paid for regular premium contracts and 4% for single premium contracts. The company will notify consumers of the reduction to the fees by mail and on its website.

· Nationale-Nederlanden (Nationale-Nederlanden Towarzystwo Ubezpieczeń na Życie SA, formerly ING Towarzystwo Ubezpieczeń na Życie SA) has committed to not use the liquidation charges in products that clients will enter into after 1 January 2016. For existing customers, the charge will not exceed 15 percent in regular-premium contracts and 1,000 PLN in single premium ones.

Additional information for the media:

Press Office, UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Phone.: +48 22 827 28 92, +48 22 55 60 314, +48 22 55 60 430
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]