• The Guidelines apply to “execution-only” sales of insurance-based investment products (IBIPs) such as telephone and online sales 
  • The Guidelines ensure the appropriate use of “execution-only” sales by defining the types of products to be sold “execution-only” 
  • The Guidelines seek to minimise the risks of consumer detriment and mis-selling 
  • The Guidelines support national competent authorities and insurance distributors in assessing these products 

Frankfurt, 11 October 2017 – Today, the European Insurance and Occupational Pensions Authority (EIOPA) published Guidelines on Insurance-Based Investment Products (IBIPs), where the associated risks are difficult for the customer to understand. 

These Guidelines have been developed in line with Articles 30(7) and (8) of the Insurance Distribution Directive (IDD) and apply to “execution-only” sales. These are typically IBIPs sold via telephone or online and where the insurance distributor neither provides advice nor verifies the customer’s knowledge of the product and the risks involved. The Guidelines aim to minimise the risks of consumer detriment arising from mis-selling of IBIPs. At the same time, they set a suitable framework to allow for „execution-only” sales of products. With these Guidelines, EIOPA supports national competent authorities (NCAs) and insurance distributors in assessing products against this framework.

The Guidelines include criteria to identify product features difficult for the customer to understand. For example, they address the nature of the charges paid by the customer and the ability for the customer to surrender the product before maturity. IBIPs including such features will not be eligible for sale via “execution-only”. 

The Guidelines will be translated into all the official languages of the European Union. Within two months of the publication of the translated versions, NCAs will need to confirm to EIOPA whether they comply, intend to comply or do not comply with these Guidelines for the purpose of “execution-only” sales. According to the disclosure rules for Packaged Retail and Insurance-based Investment products (PRIIPs), where the associated risks of an IBIP are difficult to understand for customers, a comprehension alert has to be included in the Key Information Document (KID) provided to the customer. In order to promote a convergent approach by the NCAs in the implementation of this important requirement, EIOPA intends to separately address this issue and communicate its approach accordingly. 

Gabriel Bernardino, Chairman of EIOPA, said: “These Guidelines are a significant step towards ensuring the appropriate use of “execution-only” sales of insurance-based investment products. When using this distribution channel, insurers and intermediaries need to consider very carefully if their products and the associated risks can be readily understood by their customers.” 

The Guidelines can be viewed here.