FRANKFURT (dpa-AFX) - Financial regulator Bafin wants to put a stop to excessive costs in life insurance. "High costs do not always mean an appropriately increased return," said Germany's top insurance supervisor Frank Grund. "We have sufficient examples that there is no clear link between high costs and high returns." The return on the classic pension plan refers only to the savings portion after deducting acquisition and administrative costs, among other things.

In an investigation, Bafin found a "considerable spread" in particular of distribution costs among life insurers. "We are now focusing on the worst quarter in each case: we want to take a closer look at the 25 percent of companies with the highest total costs and the highest distribution costs," Grund told Deutsche Presse-Agentur. "In the case of individual companies, we are already scrutinizing their cost structures very critically."

Based on the investigation, the financial regulator has presented a draft leaflet. According to it, old-age provision products should with "sufficient probability" achieve a return after costs that is above a long-term inflation expectation of 2 percent. "Consumers rightly expect a return after costs that is higher than long-term inflation," said Dorothea Mohn of the Federation of German Consumer Organizations (vzbv).

It is good if Bafin reviews products for costs and incentives and wants to deal with outliers, said a spokesman for the insurance association GDV. But he added that it was too short-sighted "to look solely and exclusively at returns in life and pension insurance." He added that they offer protection during the savings phase and, in the case of annuitization, the security of receiving a guaranteed payment until the end of one's life. "That, too, is customer benefit."

After evaluating comments from companies and associations on the fact sheet, Bafin plans to publish its guidelines on cost design, which it will base its supervisory practices on. "We expect companies to follow and comply with these," Grund said.

Consumer advocates are also calling for a ban on acquisition commissions paid by insurance companies to insurance agents and brokers for brokering life insurance policies.

-brokers for brokering life insurance policies. "Other

countries such as the Netherlands or the United Kingdom have had good experience with this, and the quality of financial advice and product quality have increased in both countries as a result," said Mohn, team leader for finance at vzbv.

Brussels is currently discussing a commission ban in the European Union. Grund would not like to see such a ban for the German market "because it would only reflect it inadequately. Good advice is important and must also be paid accordingly," said the insurance supervisor. "However, excesses must be avoided. That is our thrust."/mar/DP/jha