EIOPA outlines approach on product oversight and governance
EIOPA published a paper on its approach to product oversight and governance requirements for insurance distributors and manufacturers. It aims to provide clarity with respect to the supervisory approach to these requirements and provides guidance on how to ensure that product oversight and governance processes and policies are efficient, adequate and proportional. This is relevant for Dutch insurance distributors and manufacturers when applying the product approval and review process requirements for financial undertakings set out in art. 32 Market Conduct Supervision (Financial Institutions) Decree.
On 8 October 2020 the European Insurance and Occupational Pensions Authority (EIOPA) published a paper on its approach to product oversight and governance (POG). To view the EIOPA news item on this paper, click here.
Aim of the paper is to provide clarity for insurance distributors and manufacturers on the supervisory approach to POG requirements when implementing their own POG policies and thereby improving their engagement with national supervisors.1 The paper is based on the POG requirements set out in art. 25 Insurance Distribution Directive, which requirements are implemented in the Netherlands in art. 32 Market Conduct Supervision (Financial Institutions) Decree (Besluit Gedrags toezicht financiele ondernemingen Wft, BGfo). The approach of EIOPA is therefore relevant for Dutch insurance distributors and manufacturers when applying the product approval and review process (PARP) requirements for financial undertakings set out in art. 32 BGfo.
The paper gives guidance on the supervisory approach for assessing whether manufacturers and/or distributors have in place:
- adequate systems and controls for POG processes and distribution arrangements;
- adequate target market processes and procedures;
- appropriate product testing;
- appropriate distribution strategy; and
- adequate product monitoring and review.
The paper emphasizes the importance of a ‘customer-centric’ approach in implementing POG requirements. This is considered essential to ensure that the interests of customers take prime importance during product design and throughout the lifecycle of a product.
This paper can be a useful guide for insurance distributors or manufacturers when preparing, implementing and/or reviewing their POG policies and processes. It provides useful examples and an overview of the different phases of the POG process with references to the guidance included in the various chapters of the paper.
1 See page 4 ‘background’ of the paper.
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