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The notion of a “comprehension alert” is provided for in the PRIIPs KID Regulation, and the term “insurance-based investment product” is defined in that Regulation.
As stated in the PRIIPs KID Delegated Regulation, a comprehension alert would need to be included in the KID where an IBIP does not meet requirements on noncomplexity laid down in the IDD. These requirements are supplemented by criteria on non-complex IBIPs in the IDD Delegated Regulation, and further clarified by means of EIOPA’s Guidelines.
Article 30(3)(a) of the IDD and Article 16 of the IDD Delegated Regulation will apply for the purposes of determining whether to include a comprehension alert in the KID for an IBIP, from 1 January 2018, by virtue of the entry into application of the PRIIPs Regulation and the PRIIPs Delegated Regulation. This is irrespective of the entry into application foreseen in these rules and irrespective of whether or not the Member State has used the derogation under Article 30(3) of the IDD.
The comply-or-explain procedure associated with EIOPA’s Guidelines applies only to Member States which exercise the derogation in Article 30(3), IDD. However, when assessing their IBIPs against the criteria laid down in IDD to determine whether to include a comprehension alert in the KID, manufacturers of IBIPs in all Member States would be expected to take into account the provisions on complex product features set out in EIOPA’s Guidelines.