The European Insurance and Occupational Pensions Authority (EIOPA) has published ‘EIOPA’s approach to the supervision of product oversight and governance’. The Insurance Distribution Directive ((EU) 2016/97) (IDD) contains requirements on product oversight and governance for insurance distributors. These requirements aim to ensure that customers’ interests are taken into account throughout the product lifecycle. The latest approach document should be read alongside the Preparatory Guidelines on product oversight and governance arrangements by insurance undertakings and distributors, published by EIOPA in January 2019. The approach document provides greater clarity for both insurance product manufacturers and distributors on the supervisory approach to product oversight and governance requirements.
In terms of supervisory approach EIOPA states that it will look beyond policies and processes and will look at: whether such policies are proportionate, taking into account the relevant business model; whether policies are applied for the approval of products; whether product governance processes are adequate in ensuring that the product meets the target customers’ needs; and whether processes take into account all the different types and ranges of products manufactured and distributed in the market.
The approach document covers:
- systems and controls
- target market assessments
- product testing
- distribution strategy
- product monitoring and review
The EIOPA approach will govern how the different EU supervisory authorities will supervise manufacturers’ and intermediaries’ distribution strategies. It will also be influential in the UK which has implemented the IDD.