According to the position of the Financial Ombudsman, published on 31 March 2016, insurance capital fund policies (so-called polysolocates) should not be offered to consumers in any way. This financial product and its rules of payment are so complex that the consumer is in fact unable to obtain any profits.
At the same time, while creating high handling charges, including so-called decommissioning charges, this product only leads to enrichment of their providers – insurers. Statistics in this respect remain absolute – contracts for polysoloctas have been concluded by approx. 5,000,000 persons from whom the total amount of funds paid exceeds the 55,000,000,000 PLN. By comparison, this is a much larger amount than in Amber Gold, where the sum of claims exceeded only 500,000,000 PLN.
Insurance equity policies have become an investment trap that drains customer portfolios. This was a perfect action, giving the impression of system misleading, planned and implemented in the majesty of the law, with passive attitude of regulators (...)".
Polysolocata, what?
To bring the topic closer in first the order must be determined what the polysolokata is and what the mechanism for generating profit from the money paid must be.
Thus, a policy with an insurance capital fund (also called a polysolocata) is a combination of a savings investment – in the traditional sense – with a life insurance policy. To this end, the purchaser (consumer) paid money to the relevant account, which in part were invested by the insurer in other financial instruments, mainly in investment funds. This capital element of the polysolocta involved significant risks to be offset by the expected long-term contract.
Another advantage of the polysolocata, which was stressed by insurers when concluding contracts, was the absence of a tax obligation in relation to its profits. It was therefore an evasive instrument 19% Capital tax on deposit profit – so-called Belka tax. However, the amendment of the provisions has caused that since 1 January 2015 This financial instrument has also been taxed, making it attractive to potential buyers at the same time.
Source of the problem – early termination of the contract
The basic problem of polysolocate is the issue of early termination of the contract. As indicated above, the assumption of this financial instrument is long-term. The duration of the contract was usually from 5 to even 30 years (most often it was 15 years). second The main element is the systematicity of payments, which were most often made in monthly cycles.
Therefore, the insurers, in order to ‘force’ the buyer into regular cash payments for the expected long term of the contract, introduced the so-called liquidation charges into the contractual terms. In some contracts, they were also defined as either a redemption or a redemption amount. However, their purpose and economic sense remained the same – with the prior termination of the contract they were deducted by insurers from the funds collected on the individual account of the buyer.
This mechanism in practice consisted in the first the years of application of the contract, when attempting to withdraw the measures from the polysolocta, the insurer was entitled to deduct from the contract 90 to 100% the resources collected.
With the expiry of the duration of the contract, the amount of the liquidation fee (de facto a contractual penalty) was reduced to get closer to the 0% last year of the deal.
Moreover, it should be noted that the provisions governing the calculation of decommissioning charges were most often formulated using complex mathematical formulas, while using specialised financial vocabulary, which was not even clear for financial and accounting experts.
Interestingly, in one court proceeding, the insurer's analyst acknowledged that the actuarial plan had assumed that 70% customers will resign from the polysolocata offered during 5 years since it was founded.
It is therefore reasonable to assume that, when determining the rules for the payment of the funds collected, the insurers assumed that most buyers would cancel the contract before the expected deadline, so that the majority of the funds collected would be deducted as liquidation charges. This has caused a wave of criticism among buyers.
Furthermore, when offering this type of financial product, both insurers' employees and financial intermediaries or financial advisers had a very high commission. As indicated in the petitum report of the Financial Ombudsman, in extreme cases commissions even exceeded 100% the first year's contribution.
Consequently, "the pathological situation in which consumers were almost by force sold inadequate investment policies to their needs". As the Financial Ombudsman continues in his report, insurance capital fund policies have become an "..." investment trap draining customer portfolios.
This was a perfect action, giving the impression of system misleading, planned and implemented in the majesty of the law, with passive attitude of regulators (...)".
Penalties
In view of the above, in view of the numerous occurrences of consumers with complaints to the Financial Ombudsman, including the directing of cases to court proceedings, The Office for Competition and Consumer Protection imposed on insurers by decision ca. 50,000,000 PLN penalties and forced 17 insurance companies to reduce decommissioning charges to a maximum 20–30%.
However, the above legal steps do not satisfy the injured consumers, as they do not cover much of them at all. This is due to the fact that the Authority can examine only contractual patterns currently used by insurers or withdrawn at the latest six months earlier. In practice, insurers have often changed the relevant contractual patterns, excluding controls on applicable unauthorised contractual terms (sometimes while replicating them in subsequent patterns used in newly concluded contracts).
An important mechanism, which reduces the malfunctioning of insurers in the development of contractual provisions concerning polysolocate, is the register of unauthorised contractual clauses maintained by the Court of Competition and Consumer Protection.
The validity of the judgments of that court in the register includes further clauses relating in the overwhelming majority to the application and method of setting winding-up charges.
As a result, certain clauses are deemed to be strictly invalid and the consumer buyer can claim reimbursement of sums unduly withheld for liquidation charges or redemption values.
In view of the universality of the problem of unauthorised contractual provisions covering life insurance with an insurance capital fund, it is worth examining the individual provisions of the contracts for polysolokates. Depending on the content of the contract and individual circumstances, we may have quite a good amount to recover. It is worth remembering that this year claims from polysolokate from the year expire 2008, When it was a real boom for them to make.