RIP life offices hidden profits?

The LOA has reminded members and constituents that their Code on Policy Quotations (CPQ) comes into effect on 01 July 2005.

This compels life companies to declare the impact of their charges on investment performance allowing consumers to compare policy quotations from different life companies.

The CPQ makes it compulsory for insurance companies to show the combined effect of all their various charges in terms of one figure, called the Reduction in Yield (RIY).

Executive director of the LOA, Gerhard Joubert, said the industry had been looking at the issue of costs and commissions since mid-2004.

He said the CPQ was approved in November 2004 and wasbeing adopted by some members as early as February 2005.

According to Joubert, reducing the up-front costs of the life companies themselves (other than the commissions paid to intermediaries) is also an important issue as this will allow charges to be reduced.

According to Joubert many new generation products, with better early termination values, have already been launched and these products are typically also fully transparent as far as charges are concerned.