Labour Court Database __________________________________________________________________________________ File Number: CD88244 Case Number: LCR11844 Section / Act: S67 Parties: ROYAL LIVER FRIENDLY SOCIETY - and - FEDERATED WORKERS' UNION OF IRELAND |
Reduction in the period of "cover" provided by approximately 400 agents.
Recommendation:
5. Having regard to the terms of Recommendation No. 8213 and the
further submissions made on this occasion by the parties, the
Court recommends that, rather than amend the "times" rates, the
Company should reduce the cover period to six years during which
all lapses/cash surrender values would generate a full recovery of
"times" paid.
Division: Mr O'Connell Mr McHenry Mr Walsh
Text of Document__________________________________________________________________
CD88244 RECOMMENDATION NO. LCR11844
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: ROYAL LIVER FRIENDLY SOCIETY
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
FEDERATED WORKERS' UNION OF IRELAND
SUBJECT:
1. Reduction in the period of "cover" provided by approximately
400 agents.
BACKGROUND:
2. The agents are engaged in sales of insurance policies
throughout the 26 counties and the collection of premiums on such
policies. Their remuneration consists of commission on premiums
and "times" for new policies sold. At present, agents receive 21
times the weekly premium value of new industrial branch business
sold. If a policy is discontinued before its full life has
expired other than for reason of death, the agent must refund the
"times" payment received, to the Company. The Union contends that
agents should not be required to provide such "cover" right up to
the date of expiry of policies. In 1983 the Labour Court
considered various claims by the Union on behalf of the agents,
amongst them a claim for a reduction in the period of cover. In
Labour Court Recommendation No. 8213, dated August, 1983, the
Court recommended as follows:
"The Court considers that the period for which agents are
obliged to cover business i.e. for the full life of that
business, is excessive and out of line with the practice in
major Irish companies. The Court accepts, however, the
Company's statement that there would be major administrative
difficulties involved in changing the present period. In
these circumstances it is recommended that both parties
should meet as soon as possible to discuss the attendant
problems with a view to arriving at a more equitable cover
period, having regard to the position obtaining in the major
Irish companies and the Union's claim."
A meeting took place in November, 1983, at which management
indicated to the Union the difficulties in the administration of
an altered system prior to computerisation. Management also
indicated that a reduction in the cover period following
computerisation must not result in any cost increase. A computer
system was subsequently introduced. In April, 1986 the Union's
claim was again raised, and local level meetings subsequently took
place over a period of time. On 11th April, 1988, the Society
made the following proposal.
(a) All lapses/cash surrender values during the first four
policy years to generate full recovery of "times" paid.
Exits after four years not to require any recovery.
(b) The following "times" rates to be paid.
Policy Term in Years | "Times" Rate to be Paid
|
10 | 13
11 | 14
12 | 14½
13 | 15
14 | 15½
15 | 16
16 | 16½
17 | 17½
18 | 18
19 | 18½
20 | 19
21 | 19½
22 | 20
23 | 20½
24 | 21½
25 and over | 22½
The Society undertook to review costs after twelve months and to
increase the proposed "times" payable by the amount of any
reduction in costs as a result of the new scheme. The Union
rejected the proposal, stating that it was dissatisfied with a
self-financing scheme such as this. The matter was referred, on
12th January, 1988, to the conciliation service of the Labour
Court and a conciliation conference was held on 18th February,
1988. At the conference the Union proposed that the existing
payment of 21 "times" be retained and that there be a sliding
scale of cover whereby:
(a) A lapse of business within the first year would require
full recovery of fees.
(b) In the second and third years the agent would refund
fees proportionate to the length of time which business
stood good.
(c) No refund would be made by agents on business which
stood good for three full years.
This proposal was rejected by the Society and the matter was
referred to a full hearing of the Labour Court. The hearing took
place on 18th April, 1988.
UNION'S ARGUMENTS:
3. 1. Covering business for its full life is excessive and out
of line with the practice in major Irish companies, as the
Court found in Recommendation No. 8213. Agents in Scottish
Legal have a 1 year cover period and are paid 24 times the
premium. The New Ireland Assurance Company has a two year
cover period and agents are paid "times" at varying rates
depending on the policy. When averaged out over the full
range of policies, this works out at an average of 34.8
"times" payable. The current position in the Royal Liver
Friendly Society and the final offer made compare very
unfavourably with these positions.
2. The obligation on agents to cover business for the full
life of that business and return the full fee if the business
lapses at any stage is putting enormous work pressures on them
due to the time and energy expended in constantly trying to
produce new business in an effort to off-set a real decrease
in earnings. In times of economic recession and high
unemployment, insurance policies are surrendered in an effort
to reduce expenditure. It is unfair that agents should, by
themselves, bear these effects of recession. Such effects are
likely to continue. This claim is designed to protect the
earnings and living standards of agents, and to restore the
prospect of increasing earnings, something which other workers
enjoy as a result of cost of living increases.
3. This claim is a cost increasing claim. The Union rejects
the self-financing proposals put forward by management. The
Union considers that it has been very patient to date as this
claim was first raised in 1983.
SOCIETY'S ARGUMENTS:
4. 1. The offer made is in line with the 1983 Labour Court
Recommendation in that it is comparable with the practice in
relation to the cover periods of those Irish companies writing
industrial branch business. The Society proposes to continue
its practice of not charging death claims against new
business, whereas the major competitors do so.
2. In order to help to reduce chargeable exits, the Society
has made considerable efforts to publicise the loan on policy
facility. The Society is also examining whether members,
instead of cash surrendering their policies should be allowed
to surrender part or all of the accrued bonus (on with profit
policies) which would also considerably reduce chargeable
exits.
3. Over the years the Society has conducted a comprehensive
advertising campaign. Assistance is also given to agents by
means of specialist salesmen accompanying them to assist in
the task of selling.
4. Agents share in an annual bonus based on the industrial
branch and the payment for this in 1987 amounted to 10% on the
total previous years earnings, which in effect increased the
earnings from "times" by 10%.
RECOMMENDATION:
5. Having regard to the terms of Recommendation No. 8213 and the
further submissions made on this occasion by the parties, the
Court recommends that, rather than amend the "times" rates, the
Company should reduce the cover period to six years during which
all lapses/cash surrender values would generate a full recovery of
"times" paid.
~
Signed on behalf of the Labour Court
John O'Connell
________________________
10th May, 1988. Deputy Chairman.
A.K./J.C.