The European Insurance and Occupational Pensions Authority (EIOPA) has published a paper outlining its approach to the supervision of product oversight and governance (POG) requirements based on the Insurance Distribution Directive (IDD).
Insurance providers and distributors should consider their business model, product complexity and characteristics of the target market in their policies and processes. Supervisors will focus on how insurance companies ensure customer-centric business product design and ensure that adequate systems and controls are in place by:
- establishing whether target markets for each product are adequately defined;
- examining whether product testing sufficiently assesses the fairness and value of each product; and
- determining whether distribution strategies are accurate.
EIOPA hopes the paper will provide support for insurers and distributors when implementing their own POG policies and will facilitate engagement with national supervisors.