• Tomasz Chróstny, President of UOKiK, has questioned the mechanism for calculating distribution and allocation fees in unit-linked life insurance contracts used by AXA Życie TU S.A. (now UNIQA).
• These fees were designed to discourage consumers from terminating their contract in the first few years of its duration.
• The President of the Office imposed a fine of over PLN 10 million on the company for using prohibited clauses.

The decision of the President of UOKiK concerns 4 types of unit-linked life insurance offered between December 2015 and May 2019 by AXA Życie Towarzystwo Ubezpieczeń S.A. (in 2021, the company was acquired by UNIQA Group). Objections were raised to the contractual provisions specifying how distribution and allocation fees are calculated. These are initial fees, which were intended to cover costs related to acquisition, advertising, agents' commissions, preparation of contracts, etc. In the first year of the insurance policy, they ranged from 60 to 100 per cent of the basic premium, depending e.g. on the age of the insured. For some products, the company also deducted 50 percent of the money paid in the second year, and 5 percent in subsequent years. Apart from the above, AXA (now UNIQA) charges several other fees, e.g. administrative, transaction, management or insurance risk fees.

"The consumer has the right to terminate the unit-linked life insurance contract at any time, subject to a notice period. The entrepreneur may not hinder such a decision, e.g. by introducing fees which make the withdrawal from the contract uneconomic. The threat of losing all or most of the money saved is a real limitation of the consumer's statutory right," says 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 unit-linked insurance 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. At the time, the President of UOKiK obliged insurance companies, including AXA Życie TU (in the 2015 decision and the 2016 agreement), to significantly reduce liquidation fees.

"Insurance companies cannot pass on to consumers costs which should be included in the business risks. The distribution and allocation fees used by AXA after the liquidation fees were challenged had a similar purpose to them – to discourage consumers from terminating their contracts in the first few years of their duration. This is unacceptable," says Tomasz Chróstny, the President of UOKiK.

The penalty for UNIQA TU na Życie S.A. (formerly AXA) for using a prohibited clause amounts to over PLN 10 million (PLN 10,018,523). In addition, the company must inform consumers – by letter, on its website and on Facebook – about the decision of the President of UOKiK 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.

Earlier this year, the President of UOKiK issued a decision in a similar case against MetLife Towarzystwo Ubezpieczeń na Życie i Reasekuracji S.A. He challenged the clauses under which high allocation fees were charged in the first two years of the contract and imposed a penalty of over PLN 5.2 million on the company.

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