The European Insurance and Occupational Pensions Authority (EIOPA), on the 9 th December 2013, published a Report (Link: https://eiopa.europa.eu/publications/reports/index.html ) on good supervisory practices regarding knowledge & ability of distributors of insurance products.
The Report sets out good supervisory practices in the form of high-level principles that competent authorities should apply to all distributors of insurance products. These are supplemented by indicative examples of what a competent authority could require a distributor to demonstrate in terms of knowledge and ability, thus allowing for flexibility to adopt a proportionate approach at national level. For example, the Report promotes:
- Appropriate knowledge (e.g. about legal aspects, consumer protection requirements, tax regimes, markets and products) and ability (e.g. about risk perception, underwriting process, claims procedures) for distributors.
- Demonstration of ethical and professional conduct at all times, for instance to consider the best interest of the consumer in circumstances connected to the contract.
- Effective communication to the consumer regarding terms and conditions of the contract, complaints-handling, risks and rewards of a strategy or product, by using clear and comprehensible language.
- Provision of suitable and/or personalised recommendations and adaptation of these to the evolving consumer situation and need.
EIOPA considers it good supervisory practice for a competent authority to ensure there is appropriate oversight of continuous professional development.
MFSA Ref: 72-2013
