In 2016, the European Commission adopted the Insurance Distribution Directive (IDD) widening the Insurance Mediation Directive’s (IMD) scope with the aim of increasing transparency of price and costs of insurance products.
The new directive introduces a simple, standardized insurance product information document (IPID) which provides clearer information on non-life insurance products, so that consumers can make more informed decisions. The IDD also strengthens the rules on transparency and business conduct to help consumers avoid buying products that do not meet their needs.
On the 1st of February 2017, EIOPA published its technical advice (TA) for a possible Delegated Act for the implementation of the IDD. The European Commission released a draft Delegated Act in July 2017 based on EIOPA’s technical advice. As part of the Better Regulation framework, the European Commission launched a consultation requesting feedback from stakeholders and individuals. The Bund der Versicherten, member of BETTER FINANCE and BETTER FINANCE provided their feedback.
In its Press Release, the Bund der Versicherten declares that “the Commission softens EIOPA’s proposal and obviously inclines to the insurance industry”, pointing out two points in particular.
The first point stressed by the German organization is the question of conflicts of interest. Whereas EIOPA considers that monetary benefits intensify conflicts of interest, the European Commission had decided to remove this criterion from the list of criteria used to identify conflicts of interest.
The German association also points out that the obligation for insurers to clearly identify groups of customers for whom a new product is generally not compatible has been omitted by the European Commission.
More generally, BETTER FINANCE underlines that, whereas EIOPA had proposed “the fair treatment of customers” in its Technical Advice, the European Commission only refers to “customer satisfaction”. Both organizations support EIOPA’s position regarding the criteria for non-complex insurance-based investment products. A guaranteed minimum surrender value for the classification as non-complex IBIP should be included.
In its reply to the Consultation paper on Guidelines on insurance-based investment products, BETTER FINANCE already shared its view regarding the structure and the clarity of those products (read BETTER FINANCE’s answer to the Consultation paper here ).
For BETTER FINANCE and the Bund der Versicherten, the Commission’s proposal tends to soften the consumers protection.
Read here the full feedback sent by BETTER FINANCE to the European Commission
Read Bund der Versicherten’s press release here