The main benefit, worth pounds 500m a year, will come from cuts in commissions paid to financial advisers, as customers begin to shop around for the cheapest ones available.
Reductions in management charges and lower sales of inappropriate policies will account for the remaining savings, predicts the report, commissioned from National Economic Research Associates.
The findings were issued with the SIB's new guidelines on how it expects insurers to disclose their charges to customers. The SIB has also brought forward some its proposals to July 1995, 12 months earlier than first planned.
All advisers will have to tell their clients how much commission they stand to earn in cash terms from the sale of any product they are recommending.
Salesmen or agents employed by an insurance company will have to include any additional benefits they receive from their employer, such as free cars, office space and telephones. Similar rules will apply to high street banks.
It also emerged that government proposals to improve the security of company pension schemes will be announced before Parliament's summer recess begins in July.
The proposals will build on the recommendations of last year's report of the Pension Law Review Committee chaired by Professor Roy Goode. The Government is also working on a new age- related system of contracting out of the State earnings-related pension scheme.
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