Information provided on the returns and costs of long-term savings contracts and insurance policies are of key importance for a consumer selecting a product. However, this information often is hard to grasp, and making comparisons between various products is difficult.
In its statement on providing information on the costs and returns of long-term savings contracts and insurance policies to the Finnish Financial Supervisory Authority, the Finnish Consumer Agency highlighted the principle of equity in life insurance policies.
In terms of the financial security of consumers, it would be vital to specify the contents of the equity principle that regulates life insurance bonuses. More specific provisions are needed on how the policyholders’ surplus produced by insurance policies is divided between policy holders and, on the other hand, shareholders in the insurance company. Alternatively, the companies should themselves specify and publish their principles on these questions.
The consumers are increasingly expected to save for their own future pensions. In these circumstances, products with a low risk of losing the capital should, in addition to the tax incentive, produce a return that encourages saving.
Binding rules also applicable to old insurance policies
Providing information on returns and costs over the contract term of insurance policies taken out before the new rules and instructions entered into force would not be subject to a binding regulation but a guideline that has the nature of a recommendation issued by the Finnish Financial Supervisory Authority. Information provided during the term of the contract would also be necessary for consumers who have taken out their insurance policies earlier. This would enable them to continuously monitor the profitability of their policy in comparison to other products offered in the market.
Even if savings in old pension insurance policies cannot necessarily be transferred to another product, the consumer could, should they wish to do so, stop additional savings and for example save in another product.
Binding rules should also apply to capitalisation agreements concluded before the entry into force of the regulations and instructions.
KUV/9286/48/2011