Gabriel Bernardino - Chairman of EIOPA - in a letter to Jonathan Faull - Director General of the European Commission’s DG MARKT - pointed to the urgent need to improve consumer protection in the area of insurance investment products (mainly life insurance). He urges that regulatory intervention is necessary to reinforce the protection of policyholders' interests and should include rules on conflicts of interest and the assessment of the suitability of sales of insurance investment products. He proposes to use the legislative process for MiFID II to insert amendments in the draft IMD2 Directive but warns against requirements on the sale of insurance investment products to be included directly under the scope of MiFID II.
Based on the differences between the nature of the business of investment and insurance firms, he argues that the inclusion of rules on the sale of insurance products in MiFID II would be detrimental for the consumer. According to him, the current legislative framework for the sale of insurance products, for instance, is uniquely adapted to the contractual obligations that form the core of the insurance market and, in the interest of the consumer, should be maintained. Another reason for keeping legislation on insurance distribution separated from legislation on investment services would be that the same protection should apply to all customers with an insurance contract, unlike MiFID II which applies categorisation rules differentiating between retail and professional consumers.
EuroFinUse supports this call by EIOPA to improve the protection of life insurance policy holders, but strongly disagrees with differentiating protection rules for life insurance contracts with regard to other retail investment products, which are typically sold alternatively by the same retail distributors to individual investors.
Please read EuroFinUse’s position on IMD 2 here.
For more detailed information read the letter by Gabriel Bernardino to Jonathan Faull here.