EIOPA published the final report on guidelines for insurance-based investment products (IBIPs), for which the associated risks are difficult for the customer to understand. The final report includes a feedback statement with a summary of the main conclusions of the public consultation; the final explanatory text to the guidelines; the final impact assessment; the comments and resolutions template; and the opinion of EIOPA's Insurance and Reinsurance Stakeholder Group. The guidelines have been developed in line with Articles 30(7) and (8) of the Insurance Distribution Directive (IDD) and apply to the “execution-only” sales, such as telephone and online sales, of IBIPs.
The guidelines are typically intended for IBIPs for which the insurance distributor neither provides advice nor verifies the customer’s knowledge of the product and the risks involved. The guidelines aim to minimize the risks of consumer detriment arising from misselling of IBIPs. The guidelines support national competent authorities and insurance distributors in assessing these products.
The guidelines will be translated into all the official languages of the EU. Within two months of the publication of the translated versions, the national competent authorities will need to confirm to EIOPA whether they comply, intend to comply, or do not comply with these guidelines for the purpose of “execution-only” sales. According to the disclosure rules for Packaged Retail and Insurance-based Investment products (PRIIPs), where the associated risks of an IBIP are difficult to understand for customers, a comprehension alert has to be included in the Key Information Document (KID) provided to the customer. To promote a convergent approach by the national competent authorities in the implementation of this important requirement, EIOPA intends to separately address this issue and communicate its approach accordingly. EIOPA had launched a public consultation on these draft guidelines on February 02, 2017 and the final report was adopted by the Board of Supervisors on September 2017.
Related Link: Guidelines on Execution-Only Sales (PDF)
Keywords: Europe, EU, Insurance, IBIPs, IDD, Execution-Only Sales, EIOPA
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