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The European Insurance and Occupational Pensions Authority (EIOPA) released today its Consumer Trends Report 2023. It examines the financial well-being of consumers amid the ongoing cost-of-living crisis and explores whether all consumers, regardless of their characteristics are treated fairly. The findings of the report are underpinned by various data sources including the results of an EIOPA-commissioned Eurobarometer survey.
EIOPA’s analysis reveals that the ongoing cost-of-living crisis is affecting insurance and pension consumers and their relationship with financial products and services. A third of EU consumers saw their insurance premiums rise for selected lines of business while deductibles – the amount of money policyholders must pay before insurers cover claims – also increased for 17% consumers. While these developments may be justified due to rising costs for insurers, it has prompted some consumers to suspend, surrender or cancel their insurance and pension products, leaving some of them underinsured and exposed to future risks. EU consumers now have lower confidence in achieving a financially comfortable retirement compared to last year (3 percentage point decrease). The report also highlights that national supervisors and insurance undertakings have put in place some measures to ensure the continued fair treatment of consumes during the current crisis.
Beyond macroeconomic developments, evidence points to concerns about the fair treatment of traditionally discriminated and vulnerable consumers. EIOPA’s Eurobarometer survey indicates a clear gender gap regarding access to insurance and pensions products. Women in the EU are ten percentage points less financially confident about retirement. A non-negligible share of EU consumers said they were being treated unfairly on account of personal traits not conforming to the majority. Financial products that do not sufficiently consider diverse consumer characteristics in their design and distribution were found to contribute to such instances of financial exclusion. Still, EIOPA has observed initiatives to develop products addressing the needs of traditionally discriminated and vulnerable consumers.
Value for money risks persist, especially with certain unit-linked and hybrid insurance products. National supervisors across Europe continue to highlight ongoing issues in this market segment due to the high costs, high complexity and, at times, poor performance of such products. While consumers generally feel that the products they purchase offer good value for money, survey results indicate that insurance-based investment products are the least favorably judged in this respect, with a third of European consumers believing their products do not offer value.
EIOPA’s 2023 Consumer Trends Report highlights additional developments in the EU’s insurance and pensions sector: