ABI proposes extra rules to promote annuity choice

The Association of British Insurers (ABI) has proposed three new measures to become part of its planned code of conduct for insurers selling annuities.

The consultation launched by the ABI today builds on the announcement in September that it would create a voluntary code of conduct for insurers to encourage shopping around for retirement products.

In September the ABI proposed insurers should remove the annuity application form in all communications they send to retirees, preventing them from simply signing up to an annuity with their pension provider through apathy.

However, today the ABI proposed insurers should include a standard statement on the benefits of shopping around for an annuity on the first page of all communications with customers.

The association also proposed that when providers send illustrations of annuities which the customer has not asked for, those illustrations must ensure options are easy to compare.

Insurers should give consumers a clear statement about the benefits of enhanced annuities even if that provider does not sell them, the ABI said.

The ABI also wants providers' sales processes to take annuity customers through the key questions they should consider when buying an annuity.

Maggie Craig, director of life and savings at the ABI, said: "We have worked very hard with our member firms to encourage more people to shop around at retirement, but there are still too many people who choose not to.

"They could be missing out on thousands of pounds of retirement income as a result.

"We want to do everything we can to help people get a good income in retirement which is why we are asking for views on the code we plan to introduce."

The consulatation closes on 3 February 2012.