EIOPA on Product Oversight and Governance Measures Amid COVID Crisis
EIOPA issued a statement that clarifies supervisory expectations on product oversight and governance requirements amid the COVID-19 situation. To ensure the continuing fair treatment of customers in light of COVID-19 crisis, insurance manufacturers are being asked to identify the products affected as a result of COVID-19 crisis, assess possible unfair treatment of customers for these products, and consider proportionate remedial measures. This statement builds on the statement issued, on April 01, 2020, to insurers and intermediaries to take steps to mitigate the impact of COVID-19 crisis on consumers.
EIOPA expects insurance manufacturers to identify insurance products whose main features, risk coverage, or guarantees have been materially impacted by the COVID-19 situation. Where products have been materially affected, insurance manufacturers should assess whether and how they continue to offer value to the target market, taking into account the needs, characteristics, and objectives. The assessment should be on a medium to longer term basis, to take into account product lifecycles and the evolution of the impact of the COVID-19 pandemic. When manufacturers identify products that are no longer sufficiently aligned with the target market, they should assess whether this can result in possible unfair treatment. This should be an assessment for the target market in general, rather than for individual customers.
EIOPA expects measures to be taken where possible unfair treatment emerges, also taking into account the relevant legal requirements in national civil and insurance law. These measures should be proportional to the potential unfair treatment and reflect possible extended changes in product utility. In line with product oversight and governance requirements, remedial measures should aim to mitigate the situation and prevent further occurrences of the detriment. Insurance manufacturers should consider a broad range of possible measures and their impact on products over the medium to long term. EIOPA and national supervisory authorities will continue working collectively to ensure financial stability, market integrity, and consumer protection, including by continuing monitoring the market practices in light of the COVID-19 situation.
Related Links
Keywords: Europe, EU, Insurance, COVID-19, Governance, Product Oversight and Governance, Proportionality, EIOPA
Featured Experts
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
CNB Relaxes Mortgage Limits, Reduces Capital BufferRelated Articles
EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0
EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.
EBA Updates Lists of Entities for Use in Capital Calculations under SA
EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.
MAS Amends Notice on Related Party Transactions of Banks
MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.
ECB Amends Guideline on Euro Short-Term Rate
ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.
EBA Consults on Standards Related to FRTB-SA
EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).
PRA Proposes Rules Related to IRB Approach for Credit Risk
PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.
BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK
The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.
FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks
FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.
OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks
OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.
EU Amends CRR and Securitization Regulation in Response to Pandemic
To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).
