# Cornmarket:Salary Protection: monopolies in public service salary protection schemes?



## oysterman (12 Nov 2004)

A teacher friend of mine wants to take out salary protection.

Cornmarket (used to be Woodchester) broker a scheme that allows for deductions from salary and automatic granting of the relevant tax relief.

Cornmarket seem to imply that teachers cannot, therefore, shop around and get the best deal - that they won't get the tax relief if they do....

Could this possibly be true?

In other words, that an insurance company can gain a monopoly in the provision of a type of cover by arrangement with a Department of State?

Is this unique for teachers? What about civil servants, nurses etc.?


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## Protocol (12 Nov 2004)

*high charges*

Yes, Cornmarket offer AVCs, and life cover, and Salary Protection schemes to teachers (and nurses, I think).

They have a monopoly in that I think they are the only provider that has arranged salary deductions at source.


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## Moneybags (16 Nov 2004)

*Re: high charges*

Cornmarket's monopoly on AVCs is under threat because it is now possible for members of occupational schemes to top-up their pension entitlements through a standalone PRSA AVC - see . The downside is that arrangements are still not in place to reclaim PRSI on contributions to PRSA AVCs - see . 

Cornmarket never had a monopoly on income protection or life insurance. They may the exclusive arrangement for payroll deduction but there's nothing to stop you making your own arrangements.


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## oysterman (16 Nov 2004)

*Re: high charges*

Thanks for these.

So it looks like it's not a monopoly in the textbook sense of the word - but the exclusivity on payroll decuction gives them what might be described as an inertia-based semi-monopoly. These barriers to competition are really annoying. If we had a progressive, market-oriented government you'd expect them to do something about it. However, given that it turns out that the Taoiseach is a committed socialist, maybe we shouldn't be too surprised by the strangulation of competition.


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## ClubMan (16 Nov 2004)

*Re: high charges*

Are you sure that there are barriers to other companies getting involved rather than them simply deciding that that market is not worth tackling? It's one thing opening markets to competition but you can't force companies to compete if they decide that it's not in their interest to do so...


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## oysterman (17 Nov 2004)

*How do we know it's a monopoly?*

I assume that Woodchester (or whatever they're calling themselves this week) are making a profit on this business.

If they're not, why are they doing it?

If they are, then other entrepreneurs want some of it so enter the market.

Nobody else has entered the market.

So, either the profit margin is too tight to attract others or there is a barrier to entry here.

I know what my money's on.

If it looks like a duck, waddles like a duck and quacks like a duck.....it's usually a duck.


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## ClubMan (17 Nov 2004)

*Re: How do we know it's a monopoly?*

*an inertia-based semi-monopoly*

If I'd read this carefully in your original post then I would not have bothered posting what I did above. Apologies!


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## RAIPI (30 Nov 2004)

*Re: How do we know it's a monopoly?*

There's no queue of insurers willing to insure teachers for salary protection cover. They're damn lucky to have the cover at all.

If Mr or Mrs Teacher goes out to buy salary protection cover themselves personally they'll find :

· Friends First charge Class 2 rates (i.e. higher than Class 1 lives) AND impose an exclusion for stress related claims. 

· Irish Life currently classify Teachers as Class 4 rates, i.e. the highest premium rates. 

So if you want to go out there and buy it yourself, good luck to you!


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