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The European Insurance and Occupational Pensions Authority (EIOPA) published today its methodology for assesing value for money in the unit-linked market.
The methodology outlines a common European approach on how to identify unit-linked products which may offer poor or no value for money and require a close monitoring by national competent authorities (NCAs) to ensure risks are sufficiently identified, monitored and mitigated. It follows a top down process based on three layers of analysis: a market wide assessment, an enhanced product analysis and an assessment of the product oversight and governance (POG) process and documentation. For each layer, the methodology indicates different tools and provides information on how to perform the analysis.
While the objective of the methodology is to ensure a minimum common approach towards addressing value for money by NCAs, EIOPA welcomes and encourages additional steps taken by NCAs.
The methodology also offers more clarity to insurance manufacturers and distributors regarding the supervisory expectatons when addressing value for money.
To achieve consistent consumer outcomes in all European markets, the methodology provides flexibility to take into account market specificities and to address emerging risks, such as rising inflation.
EIOPA will continue addressing the emerging risks and challenges affecting some unit-linked products, including in light of current high inflation, and will eventually revise the methodology to reflect further the supervisory experience.
Background
The methodology is a follow up of the Supervisory Statement on Value for Money which was published by EIOPA in November 2021.