Market structures and remuneration
policies in Sweden
Meeting with members of the European Parlament
20 mars 2013
Christian Sandell
Senior legal advisor at Insurance Sweden
En del av svensk Försäkring i samverkan
Distribution channels
life insurance premiums
• Intermediaries 36%
(Agents and Brokers)
• Direct writing 17%
• Collective agreement 23%
(Intermediaries?)
• Intermediaries 14%
(Bancassurance)
• Other 11%
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Intermediaries in Sweden
•
Tied intermediary (banks etc)
•
Intermediary working exclusively for one
insurance company (banks and franchise)
•
“Dependent” intermediaries (majority)
•
Independent intermediaries giving independent
advice (few in Life, but more in the B2B Non-Life
sector)
•
Others (administrators of collective agreement,
administrators of group life insurance, etc)
En del av svensk Försäkring i samverkan
Customer protection regulations
in force
• Consumer Investment Advice Act (consumers only but
includes direct sale from insurance undertakings)
• Insurance Intermediary Act (all IMD costumers)
• The combined regulations goes further than IMD and are in
many areas in line with IMD2 proposal ( no ban on
independent advice, no disclosure of remuneration on
personal level)
• Both acts calls for ”god practice” and “advice against”
transactions not suitable
• Administrative rules and general guidance from the
supervisor (Finansinspektionen)
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Self regulations
• Insurance Sweden's recommendation:
 ban on commission regarding non-life
insurance in april 2003
 product information including fact sheet
• Insure Sec started in 2012 (intermediaries)
 Registration
 Licensing
 Sanctions
 (set good practice)
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Compensation to intermediaries
• The commission system is the dominant system to
compensate intermediaries in Sweden
• Intermediaries* get 88,5 % of the income in commission
and 11,5% in fees.
• 2/3 of commission on “stock” and the rest as up-front.
• Fees are more common in Non-Life B2B but exists in Life
B2B through large intermediaries.
*Members of the Swedish Insurance Intermediaries' Society
(SFM) They organise 3 out of 4 intermediaries.
En del av svensk Försäkring i samverkan
Challenges on the Swedish market
• Who is independent and who is giving independent
advice?
• Miss-selling, some cases (intermediaries)
• How can you inform more clearly about costs
• Low interest products (pension) and the “fact” that
pensions are complicated
• Large country and well spread population
• Growing need for advice
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Need for advice
A growing part of the working population will need
advise on their pension
• More and more of the occupational pensions
schemes are transferred from benefit
contribution to defined contribution. The
employee is responsible for the level of their
future pension.
• Part of 1st pillar pensions are placed individually
in the premium pension system (funds) where
each and everyone is responsible for the level
of their future pension.
En del av svensk Försäkring i samverkan
How does the system work in
Sweden?
• The use of intermediaries sets a benchmark to insurance
undertakings direct sales distribution.
• Intermediaries are important for insurance undertakings to
reach customers that are hard to get at by direct sale
• The commission-system makes it possible for insurance
undertakings to grow on “new” markets without to much
investment cost
• The commission-system (paid trough the product) gives
opportunity for all customers to get advice.
• Insurance undertakings want to pay more stock commission
En del av svensk Försäkring i samverkan