On 30 October 2015, the European Insurance and Occupational Pensions Authority ("EIOPA") published a consultation paper (the "Consultation Paper") on revised proposals for "Guidelines on product oversight and governance arrangements by insurance undertakings and insurance distributors" (the "Guidelines").
The Guidelines aim to support national competent authorities ("NCA"s) in taking all necessary steps during the preparatory period leading up to the transposition and implementation of the Insurance Distribution Directive ("IDD")1. In particular, the Guidelines are meant to provide some colour on the requirements on product oversight and governance arrangements, which are set out in Article 21a of the IDD which provides that;
"Insurance undertakings, as well as intermediaries which manufacture any insurance product for sale to customers, shall maintain, operate and review a process for the approval of each insurance product, or significant adaptations of an existing insurance product, before it is marketed or distributed to customers".
The Guidelines cover arrangements that generally apply to insurance undertakings and insurance distributors when selling insurance products to customers and are designed to ensure that NCAs follow a consistent approach in the period before the IDD is implemented. In addition, the Guidelines take account of certain of the objectives of Solvency II, the main objective of which is to ensure "adequate protection of policyholders and beneficiaries"2.
The arrangements outlined in the Guidelines refer to internal processes, functions and strategies for designing and bringing products to the market, as well as monitoring and reviewing them over their life cycle. The arrangements differ depending on whether the entity is acting as a manufacturer (Chapter 1) or as a distributor (Chapter 2) of an insurance product, and refer to steps such as the firm being required to:
Manufacturer (Chapter 1) establish and implement product oversight and governance arrangements in written policy document (to support management of conflicts of interests, and protect interests of customers); the management body of the Manufacturer should endorse and be ultimately responsible for ensuring that such product oversight and governance arrangements are properly implemented; product oversight and governance arrangements should be reviewed on an on-going basis; identify a target market for which the product...