FIRST REPORT COSTS AND PAST PERFORMANCE

Transcription

1 FIRST REPORT COSTS AND PAST PERFORMANCE DECEMBER

2 PDF ISBN ISSN doi: / EI-AM EN-N EIOPA, 2018 Reproduction is authorised provided the source is acknowledged. For any use or reproduction of photos or other material that is not under the EIOPA copyright, permission must be sought directly from the copyright holders.

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5 1 The market representativeness in terms of technical provisions for life business of the received responses was of 49%, which is lower from the initially targeted market representativeness of at least 65% as defined in the methodology.

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10 2 Such products fall under Category 4, as defined in Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs) by laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents. 3 Most PPP products are listed in EIOPA s database of pension plans and products in the EEA. 4 Standardised guarantees are guarantees that are issued in large numbers, usually for fairly small amounts, along identical lines. Such arrangements involve three parties: the borrower, the lender and the guarantor. Either the borrower or the lender may contract with the guarantor to repay the lender if the borrower defaults. Examples are export credit guarantees and student loan guarantees. Eurostat, European System of Accounts.

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12 MT BE HR DE LV ES BG FR AT IT SK GR RO PT SI EE HU CZ NL SE LU LT DK CY PL UK FI LI IE Figure 3 - Largest markets by life technical provisions (2016) REST EU PORTUGAL FINLAND AUSTRIA LUXEMBOURG SWEDEN SPAIN IRELAND BELGIUM DENMARK NETHERLANDS ITALY GERMANY FRANCE UNITED KINGDOM 0 2,000,000,000,000 Figure 4 - Largest markets by GWP in unit-linked and profit participation business (2016) REST EU PORTUGAL FINLAND AUSTRIA NETHERLANDS SWEDEN BELGIUM DENMARK LUXEMBOURG SPAIN IRELAND GERMANY UNITED KINGDOM ITALY FRANCE 0 100,000,000,000 Technical provisions Unit Linked Profit Participation Figure 5 - Shares of index-linked and unit-linked insurance and insurance with profit participation by GWP 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Index-linked and unit-linked insurance Insurance with profit participation

13 Figure 6 - Unit-linked and with profit participation insurance business as a % of total life GWP 19% 36% 21% 44% 35% 45% Index-linked and unit-linked insurance Insurance with profit participation Health SLT and Other life insurance Figure 7 Product market share in EEA Member States where with profit GWP is 50% or more of total life Member States where with profit GWP is higher than unit-linked but not 50% of total life GWP Member States where unit-linked GWP is 50% of total life GWP Member States where unit-linked GWP is higher than with profit but not 50% of total life GWP 5 Unlike insurance policies, mutual funds are targeted to both institutional and retail investors.

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15 6 A number of endowment products has been included in the sample.

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19 7 The market representativeness in terms of technical provisions for life business of the received responses of 36.22% is lower from the initially targeted market representativeness of at least 65% as defined in the methodology. 8 The jurisdictions covered are Lithuania, Estonia, Belgium, Spain, Malta, Italy, Portugal, Ireland, Finland, Sweden, Croatia, Austria, France, Cyprus, Poland, Netherlands, Czech Republic, Germany, United Kingdom, Hungary and Luxembourg. 9 Data for Greece, Bulgaria, Slovakia, Denmark, Latvia, Romania and majority of the UK has been excluded 10 FoS data has been excluded due to low quality.

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22 o o o o o o o o 11 net of insurer s administrative and investment costs only 12 Idem.

23 SE FR FR PT IT ES FR PT IT PT BE BE SE ES MT MT IT IT FR PT SE ES IT IT IT IT FR IT PT Figure 11 - Origin of largest products/funds included in the analysis by variant GWP ( ) BE SE FR FR BE 0 1,000,000,000 2,000,000,000 3,000,000,000 4,000,000,000 5,000,000,000

24 13 or underlying funds. 14 But of 2.27% when all unit-linked products are included, also those that did not report asset management costs separately from the insurer s on-going costs. Remaining products not separately reported are hybrid MOPs.

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26 Figure 14 - Unit-linked costs other than one-off included only MS where cost data is addable single premium only - weighted by GWP 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% On-going: insurer's administrative costs On-going: Asset Manager's costs On-going: Transaction costs On-going: insurer's distribution costs On-going: Biometric risk cost

27 Figure 15 - Unit-linked all costs included only MS where cost data is addable single premium only - weighted by GWP 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% On-going: insurer's administrative costs On-going: Asset Manager's costs On-going: Transaction costs Entry cost: Insurer's administrative On-going: insurer's distribution costs On-going: Biometric risk cost Entry cost: Insurer's distribution

28 Figure 17 - Unit-linked products: insurer's administrative costs as part of other on-going costs (all premiums) 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Unit-Linked Insurer's administrative costs Unit-Linked Other on-going costs

29 Figure 18 - Distribution costs of unit-linked products - weighted by GWP (all premiums) both 17% entry cost 39% Figure 19 - Distribution costs of profit participation products - weighted (all premiums) both, 25% entry cost, 44% ongoing 44% entry cost on-going both ongoing, 31% entry cost on-going both Figure 20 - Profit participation products: insurer's administrative costs as part of "other on-going costs" (all premiums) 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% A B C D Average EU E F G H K L M N Insurer's administrative costs Total other on-going costs

30 Figure 21 - Other on-going costs - single premium (average EU, weighted by GWP) 4.00% 3.00% 2.00% 1.00% 2.02% 1.35% 1.07% 0.98% 2.42% 2.58% 3.00% 3.56% 2.58% 0.00% UL on-going PP on-going 15 But not net of on-going distribution and biometric costs, where these were provided

31 Returns Figure 23 - Annual returns over time All products - all premiums - All risk categories (EU weighted GWP) 9.00% 8.00% 7.00% 6.00% 6.61% 6.70% 5.00% 4.00% 3.00% 3.30% 3.14% 3.21% 2.83% 3.81% 2.31% 2.00% 1.00% 2.62% 2.31% 0.00% Year UL rg UL rnav UL rnet PP rg PP bonus PP rnet

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33 Figure 27 - Average inflation in the EU ( ) Average EU Min Max

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36 Figure 30 - Annual Returns PPPs Unit-Linked and Profit participation All products - Regular- All risk categories (Weighted GWP) 18.00% 16.00% 16.11% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 8.49% 5.74% 4.62% 3.45% 3.78% 3.58% 3.37% 3.12% 2.80% UL rnav UL rnet PP bonus PP rnet

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40 16 Commission Delegated Regulation of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs) by laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents

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44 Figure 3 - Unit-linked: Pre-contractual and annual disclosure; reporting to supervisor Pre-contractual: Not required 6 Pre-contractual: Required Annual disclosure: not required Annual disclosure: required 21 Reporting: Not required 8 Reporting: required Figure 4 - Profit participation: Pre-contractual and annual disclosure; reporting to supervisor Pre-contractual: Not required 4 Pre-contractual: Required Annual disclosure: not required Annual disclosure: required 20 Reporting: not required 3 Reporting: required Pre-contractual: Not required Figure 5 - PPPs: Pre-contractual and annual disclosure; reporting to supervisor 5 4 Pre-contractual: Required Annual disclosure: not required 20 Annual disclosure: required 9 12 Reporting: Not required Reporting: required 19 Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

45 Figure 6 - Unit-linked IBIPs Figure 7 - With profit participation IBIPs 5 0 AMC Figure 8 - PPPs Figure 9- Unit-linked IBIPs 7 Required disclosure of total costs 16 Disclosure of costs not required Figure 10 - With profit participation IBIPs 4 Required disclosure of total costs 14 Disclosure of costs not required Figure 11 - PPPs 7 Required disclosure of total costs 16 Disclosure of costs not required

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47 20 As expressed as a sum of sum of data in R0600 and R0690 template S Balance sheet, Annex II, Solvency II requirements, 2016 data. 21 the sample of participating insurance undertakings to be selected by the authorities where the Freedom of Services business based on Solvency II GWP data was the highest above 50% (Ireland and Luxembourg) was additionally complemented by domestic insurance undertakings taking-up business in another Member State under the freedom of establishment, this is by branch offices of EU/EEA insurance undertakings and any permanent presence of an insurance undertaking even where that presence does not take the form of a branch, but consists, for example, of an office managed by the own staff of the insurance undertaking or by a person who is independent but has permanent authority to act for the insurance undertaking as an agency would.

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59 EUROPEAN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY Westhafenplatz 1, Frankfurt am Main, German y