December 11, 2017

EIOPA published an Opinion on monetary incentives and remuneration between providers of asset management services and insurers. National competent authorities must provide guidance to insurers on how to apply the principles included in the Insurance Distribution Directive (IDD) and Solvency II Directive when it comes to conflicts of interest arising from monetary incentives.

National competent authorities are expected to provide clarifications to insurers on how to apply these legal principles when it comes to conflicts of interest arising from the monetary practices as well as their practical application to the management of unit-linked products. Within six months of the latest application date of certain legal acts, the national competent authorities are requested to provide feedback on regulatory or supervisory actions taken on the basis of this Opinion. Within this period, the national competent authorities are also requested to report to EIOPA if and how domestic market practices have evolved. The legal acts that are being referred to for this purpose are the IDD, the Packaged Retail and Insurance-based Investment Products (PRIIPs) Key Information Document (KID) Regulation, the Product Oversight and Governance Delegated Regulation (C(2017) 6218 final), or the Insurance-Based Investment Products (IBIPs) Delegated Regulation (C(2017) 6229 final).

The Opinion is a follow-up on EIOPA’s thematic review, which was published on April 26, 2017. The thematic review assessed the potential risks for consumers due to monetary incentives and remuneration payments from asset managers to insurance undertakings in the unit-linked market. The thematic review concluded that monetary practices between asset managers and insurance undertakings are significant and widely spread across the EU.

 

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Keywords: Europe, EU, Insurance, Consumer Protection, PRIIPs, KID, IDD, Solvency II, IBIPS, EIOPA

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