Excessive expenditure by Irish insurers on expensive foreign trips and lavish entertainment for brokers is to be banned. The move follows harsh criticism of recent extravagant overseas junkets.
In February, Irish Life spent more than IR£500,000 on taking 43 brokers and their partners for a plush four-night trip to South Africa. Other insurers have jumped on the “goodies” bandwagon. Hibernian hosted a fortnight's jaunt to Brazil for 24 brokers, and there has been no shortage of foreign trips and away days from most other insurers.
The Irish Insurance Federation (IIF) is struggling to cope with the bad publicity created by these inducements and aims to put a stop to the hospitality warfare between rival companies.
A new IIF code of practice is to be introduced, outlawing gifts or hospitality involving more than “modest business expenditure”. That would be interpreted as paying for training programmes, providing computer hardware and software, and promotional gifts valued at no more than IR£100.
Restrictions would be placed on the organising, promoting and funding of social and sporting events, including domestic and foreign trips and hospitality.
Industry sources describe recent broker trips as “madly extravagant” and there is growing concern that the intermediaries'
duty to act in the best interests of their clients may be compromised by the insurers' largesse.
Not only that, but there is a growing feeling that such extravagant expenditure is a significant factor in the soaring price of life, motor and household insurance in Ireland.
Government officials are reported to be examining the insurers' broker entertainment activities to see if they are illegal under the country's competition law.