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These Guidelines apply to “execution-only” sales. These are typically IBIPs sold via telephone or online and where the insurance distributor neither provides advice nor verifies the customer’s knowledge of the product and the risks involved.
The Guidelines aim to minimise the risks of consumer detriment arising from misselling of IBIPs. At the same time, they set a suitable framework to allow for “execution-only” sales of products. With these Guidelines, EIOPA supports national competent authorities (NCAs) and insurance distributors in assessing products against this framework.
The Guidelines include criteria to identify product features difficult for the customer to understand. For example, they address the nature of the charges paid by the customer and the ability for the customer to surrender the product before maturity. IBIPs including such features will not be eligible for sale via “execution-only”.
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. In order to promote a convergent approach by the NCAs in the implementation of this important requirement, EIOPA intends to separately address this issue and communicate its approach accordingly.