The Insurance Regulatory Agency and the Pension Funds Regulatory Agency have issued a joint resolution establishing new technical parameters and coverage conditions applicable to insurance companies that sell annuities for pensioners. The new conditions apply to all contracts offered from December 2007.
The resolution is designed to place products on an equal level and provide a more transparent framework for the sale of annuities to pensioners. To this end, the regulation establishes:
(i) the administrative charges that insurance companies may impose;
(ii) the valuation to be used in order to adjust rents;
(iii) the procedure to be followed in order to allocate a percentage of the surplus profits to the beneficiaries; and
(iv) a prohibition against insurance companies and/or their intermediaries granting additional benefits that are different from those stated in the resolution.
This way the resolution guarantees beneficiaries freedom when choosing an insurance company by providing standard forms that allow the insured to compare different proposals simply and ensuring that adequate information is provided, particularly as life annuities are irrevocable.
The resolution makes uniform the different types of commercial product, allowing insurance companies to differentiate their products only with respect to the percentage of surplus profits and, as a result, through the profits obtained.