Only one in four Belgians knows what a Class 23 investment insurance is and even those investors who are familiar with these unit-linked products are not able to mention the advantages and risks, according to a survey of Class 23 products commissioned by Generali Belgium and executed by iVox in January 2017 among more than 2,100 respondents and published on August 10.
More than 40% of Belgians invest in one or more financial products, according to the study. The Class 21 savings insurance is the most popular, followed by investment funds, equities, bonds, Class 23 investment insurances and funds which invests in other funds. According to the survey, which focuses on the knowledge of Class 23 products, only 25% of respondents know these products are life insurance products linked to investment funds. When asked about the pros and cons, little more than 10% knew that no withholding tax is paid on Class 23 products, nor did they know that you have to pay a premium tax or that you can opt to include a beneficiary of choice in the contract.
"The fact that only one in four Belgians knows what a Class 23 products is, is not that surprising," said a spokesperson for Generali. "But what is surprising is that those who do know these type of products cannot correctly list the benefits and risks," said the official.
'The maturities are too long', 'the return is too low' and 'the risk is too high' were the most frequently stated reasons why respondents do not invest in Class 23 products, according to Generali.
The survey also investigated whether Class 23 customers are satisfied with the communication about their investment. Fifty percent of the respondents who receive annual updates about their investment indicated that they would prefer to receive more frequent updates. Consequently, obtaining an update about the state of affairs is one of the main reasons for investors to contact their broker or insurer.
Thirty-eight structured Class 23 products have been launched in Belgium this year to date, according to SRP data. The structures, which collected combined sales of €651m, are sold via KBC and AG Insurance, respectively, with the latter distributing its products via three distribution channels: BNP Paribas Fortis (nine products/€164m); BPost Bank (four products/€21m); and the AG Insurance brokerage channel (six products/€27m). Fifty-three Class 23 products worth €1.4bn had strike dates in 2016.
Although Generali does issue Class 23 products itself, they are not seen as structured, according to the spokesperson. "We only commercialise life insurance products linked to investment funds without capital guarantee." However, Generali has acquired a market share of 13% in Belgium in the first quarter of 2017, and with a number of fiscal measures in the summer agreement of the federal government on the horizon, the insurer expects the demand for Class 23 products to increase significantly.
'Class 23 products are exempt from the new levy on investment funds,' said Tom Vanham, chief executive officer of Generali Belgium, in a statement. 'A further shift in the investment behaviour of the investor is, therefore, likely, and I think that this will ensure proof to be the final breakthrough for Class 23 products.'
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