Survey of compliance with principle of equity by life insurance companies in 2015: bonuses provided by companies have remained fairly stable
According to a survey of compliance with the principle of equity published by the Financial Supervisory Authority (FIN-FSA), life insurance companies have complied fairly well with the principle, despite rather large variations between company bonus policies. The companies also complied with their agreed principles for distribution of bonuses. Bonuses have remained fairly stable in recent years, although they have lately decreased due to the declining interest rate market. The falling interest rates are not, however, fully reflected in the bonuses. Bonuses have, on average, exceeded both the change in consumer prices and market interest income.
The principle of equity refers to how companies distribute surpluses between customers, on one hand, and customers and company shareholders, on the other. The principle of equity also requires compliance with the principle of continuity: companies must undertake to maintain the level of bonuses for their customers. This requirement does not apply to dividends or interest on the guarantee capital. The definition of objectives for the principle of equity is based on provisions in the Insurance Companies Act.
FIN-FSA collects insurance statistics on life insurance companies annually, and this information is used in the survey of compliance with the principle of equity. The survey compares the bonus distribution objectives disclosed by the companies on their websites and reports of the actual achievement of said objectives.
The most recent survey also analyses some ring-fenced insurance portfolios and corresponding investments. In general, ring-fencing of insurance portfolios and covering investments is in accordance with the principle of equity, because it enables a closer consideration of the amount, and type of formation, of surplus created by the insurance agreements.
The survey is in Finnish and contains a summary in Swedish.
For further information, please contact
- Jari Niittuinperä, Chief Actuary, tel. +358 10 831 5517