Life insurance with an investment
component. Unit-linked products.
Ph. D. Małgorzata Więcko-Tułowiecka
Attorney At Law
The Polish Insurance Ombudsman Office
Bucharest, March 2014
The Polish Insurance Ombudsman
created in 1995,
represents policyholders, beneficiaries of life
insurance and victims of accidents claiming
compensation from insurer,
represents consumers and non-consumers,
main tasks: alternative dispute resolution (ADR):
16.516 complaints in 2014,
other tasks: issuing legal opinions of legislative
proposals, informing the Supervision Authority
about unfair practices of insurers and
intermediaries, education,
Unit-linked insurance in Poland
available on the Polish market since 1995 as life insurance with a supplement of an
evolved into strict investment products with almost no life protection  whole
premium paid to insurer is invested into insurance investment funds and amount paid
to beneficiary is no more than premium paid + income from investment
new unit-linked insurance introduced a LIQUIDATION FEE if consumer quits the
agreement before it’s final date, the liquidation fee is calculated from the premiums
paid and customer receives only a part (if any) of his investment. Fee for liquidation
of the agreement in the first year and second year is 100% of the premium paid.
„Decreases” in next years to 90%, 80% etc.
high commission paid to intermediaries for selling unit-linked – usually total amount
of premium paid in the first year by customer
Consumer problems with unit-linked in Poland
in 2011 and 2012 an increase of consumer complaints received by
the Polish Insurance Ombudsman Office (2011 – 146 complaints
(1%), 2012 – 516 complaints (3,4%)),
consumers complaining about misstatements of intermediaries –
non-disclosure of information about liquidation fees, nondisclosure of information on the risk of the investment,
consumers were informed about high profits – 10% per annum,
15% p.a.,
consumers were informed that the money is paid into a safe
deposit additionally insured,
consumers that resigned from the agreement lost all their money
due to the liquidation fee.
Actions undertaken by the Insurance
- revision of complaints and unit-linked products,
- identified unfair selling practices but also problematic issues
regarding construction of the products
- decided to prepare and publish an in-depth report
REPORT PUBLISHED IN DECEMBER 2012 (144 pages in Polish)
- submitted to:
1. Polish Supervision Authority
2. Polish Competition and Consumer Protection Office
3. Polish Prime Minister
4. Polish Ministry of Finance
Report on unit-linked insurance
identifies some unit-linked insurance as strictly financial instruments that
should not be distributed by insurance companies,
identifies the common practice of mis-selling of these products in banks and
„independent financial advisors’” offices,
identifies violation of IMD directive and supporting Polish provisions as unitlinked insurance are offered in the form of a group insurance – no
qualifications needed to „sell” unit-linked insurance, consumers are not parties to
the insurance agreement, but members of a group scheme (limitation of many
rights for the consumer and limitation of obligations of the seller),
identifies the use of unfair contract terms previously banned by the Polish
Consumer Court (as to the liquidation fees),
Report on unit-linked insurance
identifies the problem of over-pricing of initial value of the investment
fund’s unit,
identifies some unit-linked insurance as highly complicated, not
designed for average consumers,
identifies loss of millions of PLN,
identifies two insurers with the most unfavorable products,
requests actions of the competent authorities.
Results of the report
the first public information on new unit-linked insurance,
allegations and threats of insurers,
an impulse for actions of competent authorities.
Letter of the Polish Supervision Authority to the Ministry of Finance
approving the report with a proposal for amendment of provisions
concerning group insurance,
Draft proposal of the soft law on information practices introducing a
Key Information Document by the Polish Association of Insurers (to
be in force as of May 2014),
Results of the report
Decision of the Competition and Consumer Protection Office
issuing a fine on one of the banks involved in selling unitlinked (around 1,5 mln Euros),
Draft proposal of the Polish Supervision Authority of soft law
on bancassurance introducing information obligations related
to unit-linked insurance but also prohibiting banks to accept
high commissions from insurers in group insurance (to be in
force as of November 2014),
Ombudsman is providing a legal opinion to the court
Results of the report
More complaints resolved in favor of consumers – banks
and insurers are more willing to settle disputes and return
More complaints to Insurance Ombudsman in 2013 – 1.216
Greater avareness about unit-linked insurance among
Total mount of premiums collected by insurers in 2013
related to unit-linked’s did not decrease.
Thank you for your attention