A stable, well-functioning financial market for allA stable, well-functioning financial market for allInsurance broker commissions in the life insurance market
Finansinspektionen has examined insurance broker commissions of 17 life insurance companies. This report helps to explain the structure of broker commissions in the Swedish life insurance market for traditional with-profits business as well as for unit-linked business.
Our examination has shown that the commission terms are complex and, in general, not known to the policyholders. Finansinspektionen is of the opinion that increased information within the insurance market on prices and terms, including commission terms, is an important tool that would give customers incentives to raise higher demands on distributors and producers of insurance products.
In the new Act on Insurance Mediation Finansinspektionen expects to be given the powers to issue more detailed requirements as regards information on broker commissions.
The commission structure contains elements of high lump sums or so-called up-front commissions, which are paid out to the broker when the policy is issued. Such commissions create economic incentives that under certain conditions may conflict with the policyholder interests.
Inrceased transparency might result in a review of the system of up-front commissions. Such a review is also a condition for the well-functioning of an extended, legal right to transfer of policies.
