On February 26, the European Parliament called for full disclosure of fees and costs of insurance products by voting the amendments to a draft update of EU rules on the information and advice offered by the insurance sector.
MEPs agreed on the amendments to the insurance mediation directive to strengthen the rights of consumers when purchasing insurance, introducing similar information requirements and level the playing field between insurance companies and insurance sellers.
The provisions are aimed at ensuring better information, advice and protection for clients by "shedding greater light on the high and hidden costs of insurance products". For insurance investment products (e.g. life insurance), standard information on the obligations under the contract and risks insured and excluded will have to be provided, as well as the overall cost of the contract, advice and service charges. Clients’ needs will also have to be met and, in this light, sales staff - that should be well trained to meet the requests and needs of buyers - will have to assure that an "appropriateness test" along the lines set out in EU rules for financial products (MiFID) is carried out.
Guillaume Prache, Managing Director at BETTER FINANCE, believes that “the eventual full disclosure of the costs of insurance products is indeed at last a big step forward for the protection of EU citizens as savers and pensioner and at last an alignment with the cost disclosure rules of the other retail investment products covered by the MiFID Directive”. However, investors “will still be facing the issue for non-insurance regulated pension products”.
Please read the European Parliament press release here.
Cartoon by Howard McWilliam / The Sunday Telegraph.