Pensions and insurance intermediary Aon has commended the Danish FSA’s proposal this week to make pension providers split their life and non-life insurance operations, saying the new rules will lead to more robust competition and innovation in the sector.
The financial watchdog published new draft regulations on Tuesday, aiming to tackle the competitive problem of life-insurance pension providers offering loss-making health and accident insurance as a sweetener in corporate pension packages.
Søren Husted, chief operating officer and director of retirement and health at Aon in Copenhagen, said: “We see this as positive for customers, as we will see some more realistic pricing of SUL [health and accident insurance] products, and deriving from that, also on the management of customers’ savings, which will lead to the Danish market becoming attractive to more players.
“This will create a breeding ground for strengthened competition and innovation in relation to products and solutions for customers, which we see as extremely positive,” he said in a statement from the company.
Aon said that in its intermediary work, it had recently implemented a strategy of unbundling, according to which it placed customers’ insurance and savings with two different life insurance firms.
This method created transparency and gave rise to fair payment for both insurance and savings, the firm said, adding that, in the long run, it was for the benefit of both the customer and the life insurance company.
Husted said his firm saw unbundling as the solution of the future.
“Whether this ‘unbundling’ takes place within the same life insurance company or shared between two life insurance companies is not important as such; the most important thing is that the customer achieves an attractive and transparent solution,” he said.
The Danish FSA’s proposal on a revised executive order on SUL for life insurance companies – a group which includes most of the country’s main pension providers – is out for consultation until 1 September.