Insurance Europe has today published its response
to a consultation by the European Insurance and Occupational Pensions
Authority (EIOPA) on a framework to address value for money risk in the
European unit-linked insurance market.
As recognised by EIOPA,
unit-linked and hybrid products can offer important benefits for
policyholders and the Capital Markets Union. The design, distribution
and review of such products is already carefully regulated by the
Insurance Distribution Directive (IDD), which offers all the necessary
tools to ensure a high level of consumer protection.
EIOPA should
therefore focus on ensuring that the current rules are properly applied
by national supervisors, rather than introduce further limitations to
the design and distribution of unit-linked and hybrid products, such as
those proposed in its draft framework on value for money. Such an
approach would limit consumers’ choices, as unit-linked and hybrid
products represent a vehicle for investment diversification and can
provide opportunities for long-term or pension savings for consumers.
Furthermore:
- Developing
an entirely new system, with new definitions, procedures and tests,
will create unnecessary additional red tape, legal uncertainty and
compliance costs.
- There is no one-size-fits all definition of
“value for money”, as the overall adequacy of the product to the
client’s needs is the most important element.
- It would go
beyond supervisors’ role to try to limit the number of underlying
investment options in unit-linked and hybrid products.
Moreover,
EIOPA should not pre-empt political discussions on the forthcoming
review of the IDD ahead of the outcomes of its own report on the
application of the IDD, and the European Commission’s assessment of the
retail investment market.