An amendment to Poland's insurance law that would do away with multi-agents, or agents who represent more than one company, is both dogmatic and impractical, insurance professionals said.
Multi-agents are relatively unregulated intermediaries who sell insurance policies for multiple insurers. Smaller firms depend on them, since they are often unable to afford the costs of maintaining teams of agents on their own.
The amendment, which is in Parliament, requires agents to have a license to represent only one company. But critics charge that the proposal would not only affect the incomes of multi-agents, but also hurt the small businesses that depend on them while discouraging much-needed competition in the industry.
You're not allowed to have multi-agents at all? said Pawel Dangel, the president of Towarzystwo Ubezpieczeniowe Allianz űycie Polska. In fact, it's really unrealistic.
Small firms fear that the amendment would force former multi-agents to work for more established companies, such as Powszechny Zakład UbezpieczeŃ (PZU), which already controls about half of the insurance industry.
Forcing a multi-agent to align with a single company would reduce distribution channels to those companies that have not chosen to develop captive distribution channels, said Robert Zilg, the president of Metropolitan Life Ubezpieczenia na űycie (MetLife).
That could stifle competition, he said.
The consequences for the life insurance sector are more ominous given that 90% of business is controlled by just four companies.
It could affect competition among companies, said Zilg, who added that about 10% of MetLife's business originates from multi-agents.
Ready, aim ...
The fact that multi-agents have had so much freedom has led to their undoing.
This is the gray area of the Polish insurance market, Dangel said. The problem is that no one regulates multi-agents. Basically they're free to do what they want to do.
Dangel said that questionable practices among agents, such as not always offering clients the best policy according to their needs, have blighted their reputation.
But not all multi-agents are considered dodgy.
I've got nothing against multi-agents, Dangel said.
And, as Zilg noted, they are an important part of the industry.
Insurers propose that rather than an outright ban, a watchdog be set up to monitor the agents.
People will run into tricky relationships with relatives and friends to make the industry exist (regardless), Dangel said. I prefer to regulate the intermediaries. If a multi-agent wants to sell to Allianz, we would train and supervise him.
But multi-agents are not out in the cold yet, as their lobbying body, the Polish Insurance Chamber, still has time to convince the legislature to make changes.
We will try to present our concepts and ideas to the Senate, Dangel said. There's still a window of opportunity.
- Staff report
