EIOPA on Supervisory Approach to Product Oversight and Governance
EIOPA published its approach to the supervision of product oversight and governance requirements in the insurance sector in EU. EIOPA takes a consumer-centric approach to supervision based on the requirements of the Insurance Distribution Directive (IDD). This approach is expected to support insurance manufacturers and distributors when implementing their own product oversight and governance policies as well as to facilitate engagement with national supervisors.
In the published guidance document, EIOPA explains the approach and aim to supervision of product oversight and governance in the insurance sector. EIOPA emphasizes that insurance manufacturers and distributors should take into account their business model, product complexity, and characteristics of the target market in their policies and processes. It also sets out the approach by explaining that supervisors will focus on how insurers and distributors ensure customer-centric business product design, approval, and distribution process with adequate systems and controls in place by:
- Establishing whether target markets for each product are adequately defined
- Assessing whether product testing sufficiently assesses the fairness and the value of each product
- Determining whether distribution strategies are adequate
- Assessing whether manufacturers adequately monitor and regularly review products, either for ad hoc reviews or at appropriate intervals
The published document is for information purposes only and is neither binding on national competent authorities, nor on insurance distributors and insurance manufacturers. It does not amend or form any part of the IDD or the Commission Delegated Regulation (EU) 2017/2358 (POG-DR). As explained, supervision of product oversight and governance is based on Article 25 of IDD. The requirements outlined in Article 25 are further specified in the POG-DR. Articles 2 and 3 of the POG-DR specify that product oversight and governance requirements are applicable to insurance undertakings (subject to Solvency II and to IDD) and to insurance intermediaries (subject to IDD) which manufacture insurance products that are offered for sale to customers and which advise on or propose insurance products that they do not manufacture.
Related Links
Keywords: Europe, EU, Insurance, Product Oversight and Governance, Insurance Distribution Directive, Proportionality, IDD, Solvency II, EIOPA
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
OSFI Updates Timelines for Implementation of IFRS 17Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.