• MetLife's method of charging allocation fees in the first two years of contracts for life insurance coverage with a ULIP was unlawful.
• The company intended to discourage consumers from terminating contracts in the first years of their conclusion.
• The President of UOKiK Tomasz Chróstny imposed a fine of over PLN 5.2 million on MetLife for using prohibited contractual provisions.

In the years 2016-2017, MetLife Towarzystwo Ubezpieczeń na Życie i Reasekuracji offered individual life insurance coverage with unit-linked insurance plans (ULIP) named "MetLife Projekt Jutro". The President of the Office of Competition and Consumer Protection expressed doubts as to contractual provisions defining the so-called allocation fees. Under the terms of such contracts, the company deducted 75 per cent of the invested premium in the first year of the contract and 45% in the second year. The consumer gradually recovered this money in the following years in the form of the so-called investment bonus, with full reimbursement around the 14th year of the contract. Apart from the above-mentioned fee, the company also charged several other fees for life insurance, e.g. administration fee.

'The aim of the challenged clauses was to make it unprofitable for the consumer to withdraw from the contract for life insurance coverage with a ULIP. However, under the law, consumers have the right to terminate such contracts at any time, subject to a period of notice, without any additional conditions. For example, they may find after a year or two that the results achieved by the funds do not guarantee a profit or even show that it is possible to incur a loss. In such a situation, the consumer should be able to terminate the contract without incurring excessive costs,' said Tomasz Chróstny, President of the Office of Competition and Consumer Protection.

A few years ago, the whole country was talking about the so-called liquidation fees charged by insurers when consumers wanted to terminate ULIP policies. In some cases, consumers lost all their savings. Such contractual provisions were considered to be abusive and were entered in the register of prohibited clauses (e.g. under numbers 2161, 3834, 4632, 4633, 5608). The President of the Office of Competition and Consumer Protection obliged insurance companies, including Metlife, to significantly reduce liquidation fees, arguing that they could not pass on costs that should be included in the risk of running a business activity to consumers.

'Allocation fees used by MetLife had the same purpose as liquidation fees. By collecting them in the first two years of the contract, the company discourages consumers from terminating it within this period, which is unacceptable. Therefore, I found the clause introducing such fees abusive and imposed a fine of over PLN 5 million on the company,' said Tomasz Chróstny, President of UOKiK.

The fine imposed on Metlife amounts to PLN 5.231.684. In addition, the company must inform consumers about the decision of the President of the Office of Competition and Consumer Protection and its consequences, i.e. that the challenged clauses should be treated as if they were not included in the contract. After the decision becomes final and binding, claimants will be able to cite it in court to pursue their claims.

The decision is invalid, meaning that the company may appeal to the court.

Consumer assistance:

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Consumer Ombudsmen – in your town or county
Financial Ombudsman – if the complaint is rejected by the financial institution

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