In a speech delivered at the 4th Conference on Global Insurance Supervision, Chairman of the European Insurance and Occupational Pensions Authority (EIOPA), Gabriel Bernardino announced that EIOPA plans to put into place a risk-based and preventative framework for conduct of business supervision in EU insurers. EIOPA will take four main lines of action as priority to ensure that good conduct is taken seriously:
- Strengthening corporate governance by ensuring that the boards of companies take into account consumers’ interests throughout the product life cycle.
- Ensuring that processes for the manufacturing and distribution of insurance products identify target markets and ensure that incentives are aligned to the interests of those markets.
- Ensuring that systematic monitoring enables conduct risks to be identified.
- Making sure that there are sufficient enforcement measures to deter against poor conduct practices.
For insurers and intermediaries operating in the UK the focus on good conduct in the product life cycle will be familiar. Clearly EIOPA is seeking to replicate the approach seen in both ‘TCF’ and the recent emphasis on product governance. This emphasis can be seen in the proposals included in the forthcoming Insurance Distribution Directive which is expected to be agreed before the end of the year.