Changes from report parliamentary committee draft to plenary report

Added(m) the term of the insurance contract, including the start and end dates of the contract;

Added(n) the means of terminating the contract;

Added(o) the law applicable to the contract where the parties do not have a choice of law or, where the parties can choose the law applicable to the contract, the law that the insurance undertaking proposes to choose, and the competent jurisdiction.’;

Added(e) paragraph 9 is amended as follows:

Added(i) in the first subparagraph, ‘paragraph 8’ is replaced by ‘paragraph 8a’;

Added(ii) in the second subparagraph, ‘23 February 2017’ is replaced by [DATE TBD IN ACCORDANCE TO DATE OF ADOPTION].’;

Added(14) in Article 22(1), the first subparagraph is replaced by the following:

Added'The information referred to in Articles 18, 19 and 20 need not be provided when the insurance distributor carries out distribution activities in relation to the insurance of large risks or with customers meeting the criteria for professional clients as defined in Article 4(1), point (10), of Directive 2014/65/EU of the European Parliament and of the Council*.'

Added_______________________________________________________________________

Added*Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).’;

Added(15) Article 23 is replaced by the following:

Added'Article 23

AddedElectronic distribution and other durable means

Added1. Insurance distributors shall provide all information required by this Directive to customers in electronic format.

AddedBy way of derogation from the first subparagraph, insurance distributors shall provide, upon request from the retail customer, the information referred to in the first subparagraph, free of charge on paper.

Added2. Insurance distributors shall inform retail customers that they have the option of receiving the information free of charge on paper.

Added3. Insurance distributors shall inform the existing retail customers that they have the choice either to continue receiving the information free of charge on paper or to receive the information only in electronic format. Insurance distributors shall inform existing retail customers that an automatic switch to the electronic format will occur after a period of at least eight weeks, if they do not request the continuation of the provision of the information on paper within that eight weak period. Existing retail customers who already receive the information referred to in paragraph 1 in electronic format do not need to be informed.

Added4. EIOPA shall, taking into account the requirements of other existing legislation, after consulting ESMA and after conducting consumer testing and industry testing, by [2 years after the entry into force of the amending Directive] develop, and update periodically, guidelines specifying the presentation of information provided in an electronic format in a suitable way for the average customer to whom the information is directed.

AddedThe guidelines referred to in the first subparagraph shall specify:

Added(a) the presentation and format of the digital disclosures, considering the various designs and channels that insurance distributors may use to inform their customers;

Added(b) the necessary safeguards to ensure ease of navigability and accessibility of the information, regardless of the device used by the customer;

Added(c) the necessary safeguards to ensure easy retrievability of the information and facilitate the storing of information by customers in a durable medium.’;

Added(16) Article 25 is replaced by the following:

Added‘Article 25

AddedProduct oversight and governance requirements

Added1. The home Member State of the manufacturer shall require that insurance undertakings and intermediaries which manufacture any insurance product for sale to customers, establish, maintain, operate and review a process for the approval of each insurance product and for significant adaptations of existing insurance products, before they are marketed or distributed to customers (‘the product approval process’).

AddedThe product approval process shall be proportionate and appropriate to the nature of the insurance product. The product approval process shall contain all of the following:

Added(a) a specification of an identified target market for each insurance product;

Added(b) a clear identification of target market’s objectives and needs;

Added(c) an assessment of whether the insurance product is designed appropriately to meet the target market’s objectives and needs;

Added(d) an assessment of all relevant risks to the identified target market and that the intended distribution strategy is consistent with the identified target market;

Added(e) reasonable steps to ensure that the insurance product is distributed to the identified target market;

Added(f) in relation to insurance-based investment products, and which are made available to retail clients, a clear assessment and describtion of both quantitative and qualitative features of the financial insurance product, including:

Addedi) all costs and charges related to the product

Addedii) ▌ whether these costs and charges are justified, in relation to those actually incurred for the design, management and distribution of the product, and proportionate (pricing process), having regard to the target market’s objectives and needs, the product’s characteristics, objectives, strategy and performance▌, as well as the guarantees and insurance coverage of biometric and other risks▌;

Addediii) additional product features and services that may impact the value and benefits provided to investors. When an insurance product offers a range of underlying investment options, these requirements must also be carried out at the level of each investment option;

Added(g) in relation to insurance-based investment products, an assessment of the risk of misunderstanding of the main features, costs and risks of the insurance-based investment product by the customers belonging to the target market.

AddedFor the purposes of the second subparagraph, point (a), the manufacturer shall, as part of the target market definition, assess the type of customers to whom the product is targeted, the knowledge and experience level needed to understand the product, the ability to bear losses, the risk tolerance and whether the product allows the target market to:

Added(a) smoothly manage short-term finances to meet short-term needs;

Added(b) absorb economic shocks; or

Added(c) reach future long term goals.

AddedThe product approval process shall ensure that insurance undertakings and intermediaries take the clients’ best interest into consideration in the manufacturing of the insurance products and take into account the intended monetary and non-monetary benefits to the customer.

AddedInsurance undertakings and intermediaries shall regularly review the insurance products they manufacture, taking into account any event or risk that could materially affect the identified target market, to assess whether the insurance product remains consistent with the objectives, needs and characteristics of the target market.

Added1a. Insurance undertakings and intermediaries shall ensure that compliance reports to the management body systematically include information about the insurance product manufactured by the firm, including information on the distribution strategy and the intended monetary and non-monetary benefits to the clients related to the financial instruments. Insurance undertakings and intermediaries shall make the reports available to their competent authority upon request.

Added▌

Added▌

Added3. Insurance undertakings and intermediaries which manufacture insurance products, shall understand and regularly review the insurance products they offer, taking into account any event or risk that could materially affect the identified target market, and assess whether the product remains consistent with the objectives and needs of the identified target market and whether the intended distribution strategy remains appropriate.

AddedInsurance undertakings and intermediaries which manufacture insurance products, shall make available to distributors all information on the insurance product and the product approval process that is needed to fully understand that product and the elements taken into consideration during the product approval process, including complete and accurate details on any costs and charges, features, objectives, strategy and performance of the insurance product.

AddedIn the case of insurance-based investment products, the information made available to distributors shall contain all the elements referred to in paragraph 1, third subparagraph, points (f) and (g), any further relevant data and an explanation showing that costs and charges are justified and proportionate and that the product meets the objectives and needs of the customers belonging to the target market.

Added▌

Added5. An insurance distributor that advises on or proposes insurance products which it does not manufacture, shall have in place adequate arrangements to obtain the information referred to in paragraph 3, second subparagraph, and to understand the characteristics and identified target market of each insurance product, including the monetary and non-monetary benefits relevant to the target market, but also to ensure that the insurance undertaking and intermediary takes into account the best interest of the target market..

Added5a. Insurance intermediaries or insurance undertakings distributing insurance-based investment products shall:

Added(a) make sure that they obtain and fully understand the information referred to in paragraph 3, third subparagraph;

Added(b) identify and quantify any further costs and charges, in particular distribution costs, that are not already taken into account in the calculation of total costs and charges by the manufacturer, including entry costs, exit costs and third-party payments received and retained by the distributor;

Added(c) assess whether the total costs and charges incurred for the distribution of the product, including those associated with the advice provided to the client, are justified and proportionate, having regard to the target market’s objectives and needs (pricing process).

Added(ca) assess additional product features and services that may impact the value and benefits provided to investors.

Added▌

AddedThe distributor shall provide the insurance undertaking or insurance intermediary manufacturing the insurance-based investment product regularly with all relevant information about the results of its pricing process. Where the distributor finds that there are costs and charges, in particular distribution costs, that have not been fully taken into account in the manufacturer’s pricing process, it shall immediately inform the manufacturer.

Added▌

Added6a. Member States shall ensure that insurance undertakings and intermediaries manufacturing or distributing insurance-based investment product consider the following when complying with the product oversight and governance requirements: