EIOPA IRSG inaugural meeting – 23 September 2024

Dear colleagues,

my name is Christian Gülich and I am a representative of the German Association of Insured located in Hamburg. During the last four years I had a mandate for the OPSG, and I am very grateful to EIOPA now being appointed as a member of the IRSG which is much closer related to the fundamental issues of our policyholder association.

We have about 45 thousand individual members, with their families at least the same number additionally. As the main income resource of our association are the fees of our members, we can clearly say that we are fully independent from any state allocation on national or European level. On the European level we are member of the consumer organisation of Better Finance in Brussels, and currently I am one of the vice-presidents of Better Finance.

With regard to the forthcoming EU legislative projects we fully supported the proposal of the Retail Investor Strategy last year. We strongly regret that due to the trialogue negotiations the initial clear distinction between a fee-based “independent” advice and a commission-based intermediation could not be maintained.

That is why I would like to attract your attention on three other issues which from our point of view are fundamental for consumers as well.

1.      The use of product intervention powers by the supervisory authorities especially in the life insurance sector;

2.      The pension gap and an extended supervisory approach;

3.      Improved possibilities for comparisons on product innovations for European consumers.

The common point is that these requirements are less or even not at all linked to additional regulations, but to more effective supervisory practices.

Related to product intervention powers I would like to highlight the example of so-called index-linked life-insurances. In contrast to unit-linked products usually they do not make direct investments into any index-linked ETFs, but usually only the bonus is invested into a structured product. So even in a year of booming stock markets like in 2023 due to high volatility the bonus can get lost. This was the case for nearly half of the concluded contract and constitutes - in our opinion - a severe breach of the requirement of "value for money".

Therefore the product invention powers of the supervisory authorities based on PRIIPs regulation should have been used, but until now unfortunately this did not happen neither on the national nor on the European level.

In order to close the pension gap from my point of view it is absolutely necessary that not only the accumulation phase, but also the decumulation phase of pension products should be taken into consideration by the supervisory authorities. A first step has already been made by EIOPA in its Advice on the IORPs II Review of September 2023. Depending on the particular pension products, administration costs and the calculation of longevity, i.e. biometric costs, strongly reduce the payouts. In the case of "immediate annuities" even distribution costs are added. Therefore the issue of the appropriate calculation of these cost categories must be a crucial part of the product oversight and governance requirements based on IDD. This can only be done by the supervisory authorities, and the results of these monitoring procedures should be made available for the general public.

Related to the third point which I had mentioned, the improved neutral comparisons on product innovations for European consumers, I would like to give you one concrete example which is linked to motor insurances and the recent technological progress.

Following to the EU regulation of Advanced Driving Assistance Systems (EU/2019 /2144), these systems are obligatory since July of this year even for all newly registered cars. In case of an accident the liability insurance will of course reimburse any damage to the third party, but what about possible unclear terms and conditions aimed at taking recourse against the policyholder and car driver due to an alleged breach of obligations? In consequence a public comparison website of “best practices” and of “alerts” related to these specific terms and conditions for policyholders on a European level would be very helpful.

This text is an enlarged version of introductory statement by Christian Gülich, German Association of Insured (BdV) at the EIOPA IRSG inaugural meeting in Frankfurton 23^rd September 2024.