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.
Keywords: Europe, EU, Insurance, Product Oversight and Governance, Insurance Distribution Directive, Proportionality, IDD, Solvency II, EIOPA
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