- EIOPA publishes European Commission Q&A on IDD implementation with important clarifications on Product Oversight and Governance
On 23 March 2021, EIOPA published responses by the European Commission, regarding the interpretation of the provisions of the Insurance Distribution Directive EU Directive 2016/97 (“IDD”) and its implementing measures in areas of utmost relevance such as: adequacy and appropriateness assessment, organizational requirements, regulation of subsidiaries and Product Oversight Governance ("POG").
With regard to POG, the Commission has, in particular:
- clarified that POG requirements in Article 25 IDD are applicable to all types of insurance products, including "tailor-made" products, even if they are addressed to a single customer or to a very few numbers of customers (excluded, in any event, large risks insurance). At the same time, however, the Commission also confirmed that the adoption of POG measures must in any event be proportionate and appropriate to the nature of the product in question;
- clarified the meaning of "significant adaptation" provided by art. 25, par. 1 IDD. In particular, this expression refers to an alteration of the essential characteristics of the product, such as, in particular: (i) the risk, (ii) the price and costs, (iii) the reference market, and (iv) compensation and guarantee rights for the benefit of the customers. In addition, the test of whether the change is significant should be carried out from the perspective of the average customer and considering the compatibility of the product with the target market;
- clarified, with respect to insurance products already distributed prior to the introduction of the respective domestic regulations implementing the IDD, that if there is no "significant adaptation" under Article 25, par. 1 IDD, and the insurance product remains unchanged (or is non-significantly changed), the manufacturer does not have to comply with POG requirements; and
- clarified that the adoption of an appropriate POG will not exclude the possibility that the manufacturer will be held responsible. In such a case, the manufacturer’s civil liability is a matter for national law and non-compliance with the product oversight and governance provisions might be a relevant factor for a court to take into account.
- IVASS: implementation clarifications of IVASS Regulation no. 45/2020
On 19 March 2021, IVASS published certain clarifications regarding the application of Regulation 45 of 4 August 2020 on POG.
In particular, the Authority
- clarified that, in the case of so-called horizontal collaborations between intermediaries, the obligations to periodically verify POG requirements (see Article 6, paragraph 6 of Regulation No. 45/2020) must be fulfilled by the insurers with respect to the issuing intermediary (as defined by Article 2, paragraph 1, letter d) of Regulation No. 45/2020). These assessments also include checking that the proposing intermediary (as defined in Article 2(1)(f) of Regulation No. 45/2020) complies with the obligation to place the insurance product within its reference market (as provided for in Article 6(5) of the same Regulation); and
- clarified that the scenario where an insurance intermediary and an insurance undertaking both manufacture insurance products is regulated in Article 3(4) of Regulation (EU) 2017/2358, whereby the manufacturer intermediary and the insurance undertaking sign a written agreement specifying: (i) their cooperation in complying with the requirements of Article 25(1) IDD; and (ii) the procedures by which they agree on the identification of the relevant market and their respective roles in the product approval process.
This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact Michele Zucca, Anthony Perotto and Guido Foglia.
