2016 - Max Planck Society - Financial Fraud: A Literature Review - 101p
1999 Fall - The individual life insurance sales practice case: A litigation primer Egler, Frederick N, Jr; Malak, Paul J. - FICC Quarterly; Walpole Vol. 50, Iss. 1, (Fall 1999): 1-28. -
Ericson, Richard V. and Aaron Doyle (2006). The Institutionalization of Deceptive Sales in Life Insurance. British Journal of Criminology, 46, 993-1010.
2016 - Max Planck Society - Financial Fraud: A Literature Review - 101p
(p63-64) - 4.3 The mis-selling of life insurance and pension schemes
One segment of the financial services industry that over the last few decades has been repeatedly plagued by episodes of large-scale mis-selling is the life-insurance and private pensions industry.
Widespread mis-selling of life insurance and pension plans resulted in major scandals and regulatory actions...
...in the United States in the 1980s (Fischel/Stillman 1997; Egler/Malak 1999),
...in the United Kingdom in the 1990s67 (Black/Nobles 1998; Ryley/Virgo 1999; Schulz 2000; Ward 2000),
...and in the Netherlands68 and India in the 2000s (Anagol/Cole/Sarkar 2013; Halan/Sane/Thomas 2014).
Although academic literature on mis-selling practices in the life insurance industry is scarce, the literature that does exist shows that the abovementioned mis-selling scandals all occurred against the backdrop of a gradual withdrawal of government support for state pension provision and a secular move away from traditional, collective “defined benefit” pensions toward personal “defined contribution” accounts, which essentially are investment products based on the investment performance of an underlying portfolio (Black/Nobles 1998; Ryley/Virgo 1999: 20; Ericson/Doyle 2006: 998; Mitchell/ Smetters 2013: 1).
Governments in those countries allowed, through legislation, and encouraged, through tax incentives and advertising, individuals to substitute personal pension plans provided by life insurance companies for collective occupational pension schemes (Black/Nobles 1998: 796–797).
The political rhetoric behind these reforms was one of bigger pension benefits, increased efficiency and flexibility of pension systems, enhanced individual control over life savings, higher returns, and decreased government pension costs (Schulz 2000: 104).
In reality, however, the reforms turned out to create the perfect conditions for widespread mis-selling of life insurances and pensions in all of the abovementioned countries.