Insurance Europe

Showing posts with label Insurance Europe. Show all posts
Showing posts with label Insurance Europe. Show all posts

Wednesday, 22 January 2020

Serious concerns raised on ESA’s approach to fixing PRIIPS KID





A group of financial associations – including Insurance Europe – has written to the European Commission to warn that the approach being taken to fix problems with the regulatory technical standards (RTS) of the Packaged Retail Investment and Insurance-Based Products (PRIIPs) Regulation is fundamentally flawed and will negatively impact consumers.
The letter sets out the following concerns:
  • Timing — The timing of the European Supervisory Authorities' (ESA) review is unhelpful. While consumer testing is already being carried out by the European Commission to inform the future full review of the PRIIPs Regulation, the ESA’s will not be able to properly take this testing on board when proposing any of their own amendments to the PRIIPS key information document (KID) in the meantime. Moreover, changes to PRIIPs will only be meaningful and effective if they are made as part of the full review of the Regulation, rather than as short-term ‘quick-fixes’.
  • Consumer testing — Any changes to the PRIIPs KID must lead to consumers having a better understanding of insurance-based investment products. It is also important that any new proposals are tested, not in isolation, but as part of the complete information provided to consumers. Given the broad and varied scope of the PRIIPs Regulation, they must also be tested on a significant range of products to ensure they are suitable for all products in all markets.
  • Constant changes — Since its entry into force two years ago, the PRIIPs framework has already been subject to a series of refinements and changes. These create a significant compliance burden for companies and are detrimental to consumer understanding. To avoid further piecemeal changes, there must be a comprehensive assessment of how the PRIIPs KID is received in practice to examine whether there is a need to overhaul the entire document.
  • Ensuring information is meaningful — A ‘one-size-fits-all’ approach will never be able to make the PRIIPs KID work for consumers. The EC and ESAs must instead reconsider the entire PRIIPs framework as part of the official review of the Regulation, and develop solutions that, based on solid evidence, will effectively improve consumer understanding and be workable for all PRIIPs in the different markets.

Monday, 13 January 2020

ESAs proposals on PRIIPs: going from bad to worse





Insurance Europe has serious concerns about the review currently being undertaken of the Packaged Retail Investment and Insurance-based Products (PRIIPs) Regulatory Technical Standards (RTS). Proposals put forward in a consultation by the Joint Committee of the European Supervisory Authorities (ESAs) on changes to the PRIIPS RTS would make things worse for both consumers and insurers.
Rather than improve the quality of information in the PRIIPs Key Information Document (KID) — which is intended to inform consumers about insurance-based investment products (IBIPs) — the proposals would:
  • Increase the complexity of the methods and presentation of information, making it even more difficult for consumers to understand.
  • Lead to misleading figures being given to consumers.
  • In general, overload consumers with information.
Insurance Europe also has serious concerns about the “quick-fix” approach taken in the ESAs’ consultation. It is vital that any new measures address the underlying problems with the PRIIPs KID and do not attempt to find superficial and ineffective solutions.
The ESAs therefore must conduct a more well-considered and better evidenced approach when proposing amendments. It needs to be clearly demonstrated that consumers will benefit from any alterations, given the significant compliance costs those changes will impose on insurers.
Fundamental changes that are required to address flaws in the PRIIPs KID should therefore only be considered as part of the official overall review foreseen by the PRIIPs Regulation. Such amendments require a thorough impact assessment and proper, holistic consumer testing of all aspects of the KID, to ensure that consumers are provided with meaningful information.
Insurance Europe’s other concerns include:
  • The introduction of any interim measures must be avoided, as they would incur additional compliance costs without achieving any added value for consumers. Repeatedly changing the presentation and the contents of the PRIIPs KID only confuses consumers and undermines their trust in the PRIIPs KID.
  • Proposals to integrate more features from the UCITS key investor information document (KIID) into the PRIIPs KID, would make it even less suitable for IBIPs, and even more confusing for consumers. IBIPs represent around 80% of the current PRIIPs market, and the PRIIPs KID must therefore be fit for insurance products.
  • Proposed changes for multi-option products (MOPs) would be particularly burdensome for insurers to implement and not add any value for consumers. On the contrary, the introduction of additional layers of information, including cross-references, and complex costs tables for MOPs would confuse consumers and expose insurers to significant liability risks.
The full response to the consultation is available here.

Thursday, 12 December 2019

Insure yourself wisely: natural catastrophes




Insurance Europe has today published an infographic on steps people can take to limit their losses from natural catastrophes. While meteorological events such as storms, floods or drought are often unpredictable and outside of our control, things can be done to reduce the likelihood of loss.
Be prepared
Prevention is the best protection, so familiarise yourself with the possible risks in your area and what to do when an emergency arises.
Choose the right policy for you
Having an appropriate insurance policy will help you to cover potential damages as a result of a natural catastrophe.
Know your coverage
Be sure to read and understand the terms and conditions of your insurance policy, including what is covered and what possible exclusions there might be.
Making a claim
If you do suffer a loss as a result of a natural catastrophe, contact your insurer immediately for help and advice.
Insurers can provide expertise
Insurers not only provide insurance cover but can also help you to prepare and protect yourself against a natural catastrophe.
The infographic is part of Insurance Europe’s #InsureWisely campaign, which aims to increase financial literacy and awareness levels across Europe.
Financial education plays a vital role in ensuring that European citizens are equipped with the knowledge, confidence and skills necessary to improve their understanding of financial products and concepts. Insurance Europe also encourages EU policymakers and regulators to play a greater role in supporting this objective.

Tuesday, 10 December 2019

Why insurance is unique




Insurance is a unique financial service, without which many aspects of modern societies and economies simply could not function. And due to its special features, the insurance industry requires a tailored regulatory approach that reflects its business model.
new publication from Insurance Europe urges policymakers to make sure the industry’s special features are taken into account when developing insurance regulation.
“Why insurance is unique — and offers unique benefits for consumers” sets out four essentials:
  • The freedom to underwrite — Standardising policies or introducing compulsory schemes can have a negative effect on the cost and availability of policies. Insurers must be able to develop products that meet their customers’ expectations, fit their risk profiles and meet legal and fiscal national requirements.
  • Tailored prudential regulation — The regulatory framework needs to reflect the fact that insurers usually have stable, up-front and long-term funding and low exposure to liquidity risk and market volatility.
  • Regulation that reflects unique distribution and varying consumer needs — Insurance products are distributed completely differently to investment products. Regulation needs to reflect this or it could lead to fewer points of sale and less consumer choice.
  • Flexibility to present products and costs in a comprehensive way — The EU’s PRIIPs Regulation that governs disclosures for insurance-based investment products fails to capture the key features of insurance products and as a result misrepresent certain information that is important to retail investors.

Wednesday, 4 December 2019

New paper: Making EU insurance regulation that works and benefits consumers



Insurance Europe has today published a new paper on how EU policymakers can ensure rules for insurers work properly and benefit consumers. The insurance industry firmly supports high-quality regulation that protects consumers and helps them to buy the right products.
Unfortunately, EU financial services rules do not always achieve their aim of benefiting consumers and the current regulatory processes themselves do not always lead to good outcomes. It is encouraging, therefore, to see that this has been recognised by the new European Commission.
In the paper, Insurance Europe calls on EU policymakers to:
  • Avoid continual regulatory changes – Policymakers should perform in-depth analysis to ensure that any new legislation (Levels 1, 2 and 3) is fit for purpose from the start. At the same time, they should keep the regulatory framework stable and change rules only if it will  demonstrably benefit consumers.
  • Avoid legal uncertainty – Policymakers should allocate the necessary time and resources to meaningful consultations with all stakeholders. The insurance industry’s experience can help the EU to produce high-quality legislation that provides maximum legal clarity.
  • Avoid inconsistencies, overlaps and duplication – Coherence and consistency across EU legislation must be ensured. This can be achieved by assessing the cumulative impact that the proposed rules and existing rules would have on consumers.
  • Avoid unfit rules and disclosures that mislead consumers – Policymakers must ensure that disclosures are clear, meaningful and help consumers to understand insurance products.
  • Avoid outdated rules and obstacles to pro-consumer innovation – Policymakers must design digital-friendly rules to allow consumers to access information or services digitally if they wish and to benefit from the opportunities that digitalisation offers. They should also make rules future-proof and innovation friendly, so they are fit for the digital age and allow insurers to respond to the evolving needs and expectations of consumers.
  • Avoid implementation timelines that are too short – There must be separate timeframes for developing Level 2 and 3 measures and for industry implementation. Insurers must also be provided with at least one year for implementation after Level 2 texts are published in the Official Journal of the EU.
Insurance Europe also published a decision tree to help policymakers to ensure they make the right choices for consumers when designing and reviewing insurance rules.

Thursday, 21 November 2019

New publication profiles insurers’ role in combatting insurance fraud




Insurance Europe has  published a new booklet entitled: Insurance fraud: not a victimless crime. The publication profiles the various measures that insurers are taking to combat insurance fraud, which is second only to tax fraud in most common forms of fraud globally. It is also worth noting that this week is International Fraud Awareness Week. 
The booklet also provides an estimate of the scale of the problem in the EU. According to estimates from Insurance Europe’s members, insurance fraud in the EU stood at approximately €13bn in 2017.
The nature of insurance fraud is constantly evolving, shaped by the technology at the fraudsters’ disposal. For example, in recent years, cyber-enabled fraud has become more prevalent as more insurance business is conducted online.
The booklet also outlines the many negative consequences of insurance fraud. For example, honest consumers face higher insurance premiums and their insurers have less capacity to deal with genuine claims quickly. Certain types of fraud put human lives at risk, such as “crashes for cash” or fraud-related arson, meaning that insurance fraud also puts a strain on society’s resources. And fraudsters are often linked to organised crime, so insurance fraud funds and facilitates other serious crime.

Monday, 7 October 2019

EU insurers call for flexibility on implementation timeline for EIOPA cloud outsourcing guidelines



European insurers say they will likely need additional time to implement proposed guidelines on outsourcing to cloud service providers, which the European Insurance and Occupational Pensions Authority (EIOPA) is currently developing. Based on past industry experience, this will be necessary to facilitate a smooth transition from current operational practices.
Insurance Europe said that the guidelines should be limited to instances of material outsourcing: ie, outsourcing that encompasses critical and important operational functions or activities only to ensure legal certainty and consistency with Solvency II. Non-material outsourcing to the cloud should fall outside of their scope.
Cloud services should only be regarded as outsourcing if there are certain risks associated with cloud services that may have a material impact on either the insurer’s ability to comply with regulatory requirements or its customers. Insurance Europe added that clear definitions are necessary to ensure that the scope of application is sufficiently precise.
In the context of access and audit rights, Insurance Europe called on EIOPA to encourage and allow greater reliance on the use of third-party certification.

Wednesday, 2 October 2019

EU insurers paid out almost 3 billion euro per day in 2018



European insurers paid out €1 069bn in claims and benefits to insureds in 2018. That is equivalent to 2.9bn per day and represents a 3.1% increase on 2017, according to the latest edition of Insurance Europe’s Key Facts booklet, which has just been published.
According to the booklet, which contains preliminary figures for the European insurance market in 2018, life insurers paid out €705bn — a 2.6% increase — in benefits to insureds, providing them with capital and/or annuities. Property and casualty (P&C) claims paid increased by 5.6% to €253bn and health claims paid increased by 4.0% to €111bn.
European direct gross written premiums amounted to €1 311bn in 2018, of which €764bn were life premiums, €407bn were P&C and €140bn were health. Total premiums increased 6.2% on 2017, with life premiums growing 6.7%, P&C 5.7% and health 4.8%.
In addition, European insurers’ investments remained broadly stable, at €10.3 trillion.

Monday, 30 September 2019

Solvency II proportionality principle key for avoiding excessive burden, but doesn’t work in practice



Insurance Europe and AMICE have issued a joint call for the EC to improve Solvency II proportionality rules to ensure that insurers are not disproportionately burdened by the regulatory framework.
While Solvency II and, in particular, its risk-based approach is supported by the EU insurance industry, changes are needed to rules on proportionality. This is because currently the sheer volume of rules imposed on companies can be disproportionate and unnecessarily burdensome relative to their activities and risks.
Proportionality is a vital element of Solvency II that was included to enable national supervisory authorities (NSAs) to exercise a proportionate application of regulatory requirements imposed on insurers, in relation to the scale, nature and complexity of their activity. As such, it can help all insurers to avoid unnecessary costs and can avoid smaller insurers being driven out of business due to regulatory requirements which are excessive relative to their activity.
EU insurers have warned that the principle of proportionality is, in practice, hardly ever applied under Solvency II and have jointly called on the European Commission to make changes. The industry’s proposed improvements would help to ensure that the principle of proportionality is applied effectively and consistently across all member states and across all three pillars of Solvency II. 

Wednesday, 25 September 2019

IFRS 17: Global insurance associations call for delay so vital improvements can be made to standard



A wide group of international insurance associations - including Insurance Europe - has called on the International Accounting Standards Board (IASB) to make further improvements to International Financial Reporting Standard (IFRS) 17 – insurance contracts - and to change its effective date to 1 January 2023.
While recognising that the IASB has made improvements in a number of areas, the associations warned that a number of significant issues have not been addressed and added that additional changes are still required to obtain a high-quality standard that can be implemented at a reasonable cost.
The associations called on the IASB to take the time necessary to make the changes needed to ensure a strong global commitment to the new standard. In addition, the significant implementation concerns that have been raised by the industry remain and must be taken into account. Therefore, the associations called for a delay to the global effective date of IFRS 17 (and IFRS 9 - financial instruments - for insurers) until 1 January 2023, in order to ensure a successful implementation.
The other associations are:
  • Canadian Life & Health Insurance Association
  • Financial Service Council of New Zealand
  • Insurance Bureau of Canada
  • Insurance Council of New Zealand
  • Insurance Council of Australia
  • Korea Life Insurance Association
  • National Association of Mutual Insurance Companies

Wednesday, 11 September 2019

IFRS 17: EU insurers say some improvements welcome, but major issues still to be addressed




Insurance Europe and the CFO Forum have issued a joint call for further improvements to be made to International Financial Reporting Standard (IFRS) 17 — insurance contracts — and have raised concerns over its timing.
European insurers submitted a joint response to a draft comment letter written by the European Financial Reporting Advisory Group (EFRAG) in response to the International Accounting Standards Board's (IASB) proposed amendments to IFRS 17.
In their response, Insurance Europe and the CFO Forum argue that while the IASB has proposed several helpful improvements in its IFRS 17 exposure draft, unfortunately a number of issues remain unaddressed and further changes are needed.
Three issues — level of aggregation, transition and presentation — were given particular emphasis because they will have the largest overall impact on the operational complexity and costs of implementing IFRS 17.
European insurers also commented on other areas of concern that were identified by the industry during EFRAG’s field testing exercise and implementation process, but which have not been fully or only partially addressed by the IASB.
The joint response also included Insurance Europe’s view that a two-year delay is needed, which therefore leads to a global effective date of 1 January 2023 for IFRS 17 (and IFRS 9 — financial instruments, for insurers).

The full letter is available here and the appendices here