The Public Event on Insurance Mediation Directive was held on 11 July 2014 in Frankfurt.
During the event the EIOPA Discussion Paper on conflicts of interest in sales of insurance-based investment products was debated. The event offered participants the opportunity to meet and actively exchange views with insurance undertakings and distributors, consumer representatives, supervisors and other stakeholders from across Europe.
EIOPA’s Chairman Gabriel Bernardino said in his opening speech that insurers and intermediaries have to put the customer at the heart of their business. “Reality is that firms have to take full responsibility for well-protected and satisfied policy holders.” He pointed out that with addressing conflicts of interest, we will solve a severe market failure and are not producing rules for the sake of making rules. “We should not be under any illusion that conflicts of interest do not bring harm to customers.”
He also said that EIOPA acknowledges that insurance undertakings and intermediaries might face different challenges when dealing with conflicts of interest. “We are mindful of the fact that rules for very small intermediaries and very large undertakings might have to differ substantially, while – at the same time – reach the common goal. Therefore, we will take proportionality into account.”
In her closing remarks Katja Wuertz, leading EIOPA’s consumer protection work, mentioned that the discussion often touched on commission: “But it is clear from the discussions today that business models depending on commission raise particular conflicts of interest that need to be considered. Perhaps we could remark that the price of keeping commission needs greater attention from regulators. We should be clear: all business models must work effectively for customers.”
She also noticed that industry representatives reiterated the point on long-term versus short-term conflicts of interests linked to different types of products. And that “the national diversities in distribution channels was also seen by some as an opportunity for spurring more competition to the benefit of consumers, whilst others took the view that the removal of all conflicts will mean the extinction of intermediaries.”
Topics that will be addressed during the event include:
- What are the types of conflict of interest that could harm customers?
- How can these conflicts of interest be best avoided or managed?
- How can conflicts of interest be best addressed for very small intermediaries?
- What are the challenges in addressing conflicts of interest for large insurance undertakings?
- What are the disclosures that should be made to customers, and when?