Insurance & Pension Denmark (IPD) has spoken out against aspects of new draft regulations effectively preventing pension firms from bundling loss-making health and accident insurance with group pension offerings – a practice the country’s competition watchdog has condemned.

Lobby group IPD said of the health and accident insurance (SUL) draft rules issued by the Danish FSA (Finanstilsynet) at the end of June: “The SUL executive order has a number of unintended consequences for consumers, the welfare society and competition”.

In a statement published on Wednesday – the last day of the FSA’s consultation on the new rules – the industry association said it was “absolutely crucial that the pension companies can still ‘bundle’ savings and insurance in one pension product, which over the years has proven to be a successful Danish welfare solution”.

IPD said it understood that the FSA wanted to address the fact that, over the years, imbalances had built up between revenues on the one hand and claims expenses on the other in the SUL business.

“The general picture, however, is that the Danish pension sector is extremely robust and has the third largest capital adequacy ratio in Europe. Therefore, the SUL regulation should not lead to inappropriate retail regulation,” the association said.

Kent Damsgaard, IPD’s chief executive officer, called it “problematic” that the regulatory draft stated that the FSA rather than company boards was to be the one to approve methods for allocating joint positions between the life and SUL business areas.

“The Danish FSA is effectively putting the companies and the companies’ boards of directors under administration,” he said, adding that this was unsustainable.

“We want to start talks with the Danish Financial Supervisory Authority on this issue too to find a good solution,” Damsgaard said.

The FSA has said that the new rules were drafted in response to the Danish Competition and Consumer Authority’s work into the pensions sector over the last few years.

Looking for IPE’s latest magazine? Read the digital edition here.