Intro

Much has been said and discussed about Solvency II, the new risk based solvency regime for the insurance and reinsurance industry. However, there can be no doubt that the next issue on the agenda of regulators is the way in which the buyers of insurance products are dealt with in practice. Whilst a fair treatment of consumers is an issue for all parts of the financial services industry, this matter is particularly important in insurance as insurance is a product that is not sold but bought. It is therefore necessary to ensure that consumers are well informed about what they are buying and that there is transparency about all aspects of the insurance transaction. A number of regulatory initiatives are on the EU agenda: the revision of the Insurance Mediation Directive (IMD II), the revision of the Market in Financial Instruments Directive (MiFiD II), the introduction of a common regulatory regime for the sale of packaged retail investment products (PRIPS). But not only in the EU, the issue of insurance distribution is on the agenda. Reforms have been called for by the G20, by the OECD and by the IAIS. These regulatory initiatives need to take account of a changing environment whereby developments such as data collection (Big Data) and information technology (Comparison Websites and Aggregators) are having a direct influence on the way in which insurance products are being distributed.

The second meeting of the Karel’s Club will look at insurance distribution from different angles, benefiting from the input of a number of key experts in the field. The discussion will focus on issues such as:

  • What are the likely regulatory changesin the near future? How will they affect the insurance industry and insurance intermediaries? Will insurance agents be affected more than insurance brokers? Is there a need to also address the wholesale market or should regulation forget about business to business? Should regulators just impose transparency or should they also regulate the way in which the sale of insurance products is being remunerated?
  • How can regulation deal with the low financial literacy of consumers? What do customers prefer? Can they really make a choice between low guarantee products with high profit participation and high guarantee products combined with low profit participation?
  • Is it possible to compare insurance products offered by different providers? How reliable are estimated payments in product fact sheets?
  • Will Comparison Websites and Aggregators take over the role of insurance intermediaries?
  • Will the market in the end be taken over by data collection institutions such as Google?