316 km 2. Yet there are 356 registered individual tied insurance intermediaries with the MFSA. More than 1 every km 2!!

Transcription

1 The Insurance Distribution Directive Deloitte, 2017

2 Insurance distribution in Malta Yet there are 356 registered individual tied insurance intermediaries with the MFSA. More than 1 every km 2!! 316 km For information, contact Deloitte Malta. The Insurance Distribution Directive 2

3 Insurance distribution in Malta Some other Key facts 4 Non-life insurance companies 1 Composite insurer 3 Life insurers 20 + Brokers 14 Insurance agents 93 Corporate TIIs 356 Individual TIIs It seems that insurance is well distributed in Malta!! For information, contact Deloitte Malta. The Insurance Distribution Directive 3

4 Insurance distribution in Malta Breakdown of non-life insurance premiums by distribution channel 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% Germany Spain France Ireland Italy Luxembourg Malta Netherlands United Kingdom DE ES FR IE IT LU MT NL UK Direct writing Agents Brokers Bancassurance Other For information, contact Deloitte Malta. The Insurance Distribution Directive 4

5 Insurance distribution in Malta Breakdown of life insurance premiums by distribution channel 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% Germany Spain France Ireland Italy Luxembourg Malta Netherlands United Kingdom DE ES FR IE IT LU MT NL UK Direct writing Agents Brokers Bancassurance Other For information, contact Deloitte Malta. The Insurance Distribution Directive 5

6 Insurance distribution in Malta Yet Malta s per capita uptake is well below half the EU average. For 2014, per capita spend was 910 whilst in Europe its 1,993. For non-life insurance, such as home and business insurance, the figures are even lower: almost a third of the European average. On health insurance, Malta s spend is around 25 per capita while the European average is just over 200. Source: Insurance Europe 2015 report For information, contact Deloitte Malta. The Insurance Distribution Directive 6

7 The Insurance Distribution Directive is a significant milestone to strengthen consumer protection in Europe. This work goes hand in hand with the fact that EIOPA places consumer protection at the very centre of its strategic objectives. Gabriel Bernardino, Chairman of EIOPA For information, contact Deloitte Malta. The Insurance Distribution Directive 7

8 Changes arising from by the IDD Exploring what will change from the IMD Expanding the scope of the Directive to cover all sellers of insurance products. Stricter requirements surrounding conflicts of interest and remuneration disclosures. Special disclosure requirements for bundled products and other product oversight requirements similar to those of MiFID II For information, contact Deloitte Malta. The Insurance Distribution Directive 8

9 Changes arising from the IDD Exploring what will change from the IMD Additional requirements for insurance based investment products (IBIPs) and the insurance products information document (IPID) for non-life insurance products. Stricter administrative sanctions and other measures, including pecuniary sanctions For information, contact Deloitte Malta. The Insurance Distribution Directive 9

10 EIOPA is bolstering its efforts on consumer protection and has made it a strategic priority for This will mean senior management taking responsibility for ensuring adequate product oversight and governance arrangements throughout the life of a product For information, contact Deloitte Malta. The Insurance Distribution Directive 10

11 Changes ushered by the IDD What will be the main focus from regulators? 1 Product oversight and governance 2 Conflicts of interest 3 Inducements 4 Cross selling 5 Continuous Professional Development For information, contact Deloitte Malta. The Insurance Distribution Directive 11

12 Product Oversight & Governance (POG) developments in one shot Key elements and impacts Guidelines issued by EIOPA on 20 February 2017 Who? Insurance undertakings Insurance product manufacturers Insurance distributers When? What? Before IDD comes into force POG Mitigating misselling Customer protection Target market Improve industry reputation Putting clients first Integrated EU market Why? For information, contact Deloitte Malta. The Insurance Distribution Directive 12

13 Focus on product governance Getting a clear understanding of the requirements around POG Product update Consumer needs To manufacture and distribute products which are in line with the particular consumer needs Remedial Updating current product offering in line with identified target market. New products Suitability & Appropriateness Target market Product design Designing product and precontractual information for consumers in line with target market. Target Market Ongoing monitoring to be done by both distributers and manufacturers Monitoring POG IDD Frame work POG Target market Training Product Governance Building an internal product approval process with senior management oversight will be key Product monitoring Ongoing monitoring to be done by both distributers and manufacturers. Product distribution CPD requirements Professional requirements for distributers and manufacturers of insurance products. Remuneration Remuneration needs to be reviewed in light of conflict of interest rules For information, contact Deloitte Malta. The Insurance Distribution Directive 13

14 Focus on product governance Product information document The IDD introduces a detailed standardized Insurance Product Information Document (IPID) for all non-life insurance products. The PID is intended to be a pre- contractual and stand-alone document which aims to allow consumers to make an informed decision. The PID has to be short, comprehensible, accurate and not misleading For information, contact Deloitte Malta. The Insurance Distribution Directive 14

15 Cross selling Product bundling For each bundled item, the distributor must inform the customer about the components: Cost Charges Risks The customer must be given the opportunity to buy these components (product or service) separately. Local example: Travel insurance bundled with local credit cards offered by banks? For information, contact Deloitte Malta. The Insurance Distribution Directive 15

16 Managing conflicts of interest Higher standards and increased scrutiny by regulators Conflicts of interests' management will now be subject to higher standards. These should be further detailed in the delegated acts. Insurance companies must ensure that any potential conflicts of interests between themselves and their customers are prevented during distribution activities. A conflicts of interest policy should be prepared or an existing one updated in line with the new requirements. If conflicts of interest cannot be sufficiently managed, the general nature or sources of the conflict should be disclosed to the customer For information, contact Deloitte Malta. The Insurance Distribution Directive 16

17 Inducements Setting a fair and transparent policy Prevent a negative effect on the quality of product Act honestly, fairly and professionally Managing inducements Customer is informed about fees, commissions or benefits Offer products in line with the consumer s best interests Develop policy relating to conflicts and inducements For information, contact Deloitte Malta. The Insurance Distribution Directive 17

18 Inducements Insurance product which are suitability and appropriate The suitability assessment is conducted by insurance companies that provide advice to customers on insurance-based investment products (IBIPs) Bundled products Suitable recommendations Recommend to the customer or potential customer the IBIPs that are suitable for that person. Professional advice Advice has to be consistent with the customer s investment goals, financial situation. In line with customer expectations Financial ability to bear losses, and their knowledge/experience level. An assessment must consider whether the overall bundled package is appropriate For information, contact Deloitte Malta. The Insurance Distribution Directive 18

19 Inducements and conflicts of interest What needs to be disclosed Financial interest Where intermediary and insurer have a form of remuneration agreement. Related parties Where the insurer and intermediary are part of the same group. Nature of remuneration The type of remuneration received in relation to an insurance contract (e.g. percentage of sale, fixed fee etc). The basis of the remuneration Whether it is in the form of a fee paid by the customer, a commission included in the premium, an economic benefit of any kind given in connection with the insurance contract, or a combination of these For information, contact Deloitte Malta. The Insurance Distribution Directive 19

20 Continuous professional development Enhancing the competence of employees and agents selling insurance products Competency and continuous professional development will need to be ensured by all intermediaries, proportionally to the complexity of the products sold, as well as the nature of distribution For information, contact Deloitte Malta. The Insurance Distribution Directive 20

21 What does the future holds for the insurance market? The distribution of insurance For information, contact Deloitte Malta. The Insurance Distribution Directive 21

22 What does the future holds for the insurance market? Ongoing innovation will distinguish insurers Early adopters Late adopters Vs I m always keen to use new technology and develop innovative products for the market. I only replace technology when they are obsolete and stick only to traditional, tried and tested products For information, contact Deloitte Malta. The Insurance Distribution Directive 22

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