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05 July 2016

EIOPA to launch EU-wide thematic review on market conduct

The EIOPA is launching an EU-wide thematic review of market conduct among insurance companies operating in the unit-linked life insurance market. The review aims to cover 60% of each national market in terms of both gross written premiums and assets of unit-linked funds.

The purpose of the review is to identify potential sources of consumer detriment stemming from the relationships between insurers and providers of asset management services. In particular, European Insurance and Occupational Pensions Authority (EIOPA) intends to analyse how remuneration paid by asset managers to insurers could influence their choice of investments and how this choice could impact policyholders. 

The thematic review focuses on three key issues:

  • Existence and characteristics of monetary incentives and remuneration.
  • How insurance undertakings address conflicts of interest.
  • How insurance undertakings structure unit-linked life insurance products.

The thematic review will be conducted in close cooperation with National Competent Authorities (NCAs). NCAs will identify participating insurance companies, gather the relevant data and information in their national market and also serve as a primary contact point for insurers in case of questions. EIOPA will manage and coordinate the EU-wide exercise as well as prepare the final in-depth analysis of the results of the thematic review.

Participating insurance companies are expected to report back by September 2016 and the results of the thematic review will be disclosed in early 2017.

Gabriel Bernardino, Chairman of EIOPA, said: "EIOPA's Consumer Trends Reports have highlighted the relations between insurers and asset managers in the unit-linked market as one possible source of consumer detriment. To meet its objective of preventive consumer protection, EIOPA needs to gain a deeper understanding of the monetary incentives and conflicts of interest when insurers select the underlying investments. A focused thematic review is therefore the right tool for an in-depth EU-wide investigation: it will build a coordinated understanding of the market practices, point at potential problems and how widespread they are.

This thematic review is an important step in the effective roll-out and implementation of EIOPA's strategy towards a comprehensive risk-based and preventive framework for conduct of business supervision."

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