Insurance Europe is suggesting that the European Insurance and Occupational Pensions Authority (EIOPA) might be a little over the top when it comes to its approach to customer sustainability preferences under the insurance distribution directive.
In its response to EIOPA’s consultation on proposed guidelines, the federation described the European supervisory authority’s (ESA) approach as “considerably less flexible” than that taken by the European Securities and Markets Authority (ESMA).
“For some important parts of the suitability assessment (e.g. the collection of information from consumers and ensuring suitability), both ESAs prescribe detailed guidance on how parts may be performed, but where EIOPA makes it a requirement by using ‘should’, ESMA allows for more flexibility by using ‘could’,” noted Insurance Europe, which said the current rules work well in practice and that they are sufficiently abstract to adapt to different scenarios.
Part of the federation’s response reads: “Overly detailed provisions would create more practical and legal difficulties than they resolve, especially for new rules that have not yet been tested. It is essential that guidelines leave distributors enough room for manoeuvre to allow for a pragmatic and efficient implementation across different EU (European Union) markets. The aim must always be to help the customer.”
Insurance Europe went on to assert that EIOPA should re-evaluate the proposed guidelines with a view to removing the “overly granular and prescriptive” requirements that Insurance Europe believes benefit neither customers nor insurers.
“It should be noted that the average advisory meeting usually lasts less than an hour and that many important aspects besides sustainability aspects must be discussed,” stated the federation. “The time spent on sustainability aspects must therefore be proportionate in relation to other aspects. Overly complex and inflexible procedures will not benefit customers.
“The industry wishes to highlight the difficulties it will face in implementing such extensive guidelines in such a short timeframe.”