The European Insurance and Occupational Pensions Authority (EIOPA) has published its annual consumer trends report. The latest report identifies risks for consumers arising from market trends which may require supervisory action from EIOPA or from Member States.
In summary the trends report has identified the following risks:
- The life sector has reversed growth trends. The decrease has further enhanced the shift from guaranteed products to unit-linked products. The growth in profit participation lines has been driven by the sale of hybrid products.
- There are continuing issues relating to unit-linked products, especially in respect of lack of customer clarity and product complexity.
- Issues relating to credit life insurance policies have emerged in the market. EIOPA plans to finalise its review of mortgage life and other credit protection insurance sold through banks during 2022.
- Increasing digitisation is creating opportunities but also bringing challenges in the market. In general there has been an increase in innovation with sales and distribution the most digitised part of the product life-cycle.
- Poor claims handling remains an issue in the market, bringing detriment to customers. However, EIOPA has observed recent improvement, largely as a result of increased digitisation.
- Emerging risks, including the pandemic and catastrophe risks, have revealed problems in relation to contract complexity and problems with exclusions.
- EIOPA has identified an increase in the use of what are known as “price optimisation techniques”. These are ways to adjust premium that are not related to the risk profile of the customer. Price optimisation techniques have led to an increase in premiums for loyal customers.
- A shift towards greater use of private pensions has been observed. Sales of personal pensions have increased in most Member States.