Customer needs to take centre stage in insurance sales

The Finnish Government is proposing major changes to how insurance policies are offered. The proposal is based on the Insurance Distribution Directive, which will have to be nationally implemented by 23 February 2018.

The main changes outlined in the proposal deal with the procedures and disclosure requirements in the sale of insurance policies. The new rules will apply to the sale of all insurance types in all channels, including e-commerce and commission trade. To sum up the changes, the insurer must always act in the customer’s best interest.

”Insurers will have to survey the customer’s needs before they sell any insurance policies. They will also need to have procedures for dealing with possible conflicts of interest. Moreover, more precise qualification requirements will be introduced to those who sell insurance policies”, explains Mari Pekonen‑Ranta, head of EU public affairs at Finance Finland (FFI). In the future, insurers must also draw up a product management plan that covers the lifespan of each insurance product and determines which customer groups it serves.

”In single premium savings policies, the obligation to obtain and disclose information will increase significantly. The financial sector supports amending their regulation to better match the regulation of other investment services. The Government recently proposed large-scale changes to the Act on Investment Services, targeting exactly these topics”, continues Pekonen-Ranta.

National legislation related to the directive must be finalised in February. Proposal on the national implementation was prepared in a long-standing Ministry of Social Affairs and Health committee, which also included an FFI representative. Pekonen-Ranta commends the committee’s work: according to the report of the Finnish Council of Regulatory Impact Analysis from last summer, the impacts of the proposal have been analysed thoroughly.

Negotiations about EU-wide specific regulation are still ongoing in Brussels. The negotiations also touch on whether the regulatory reform should be implemented later than planned, in autumn 2018 instead of February 2018. FFI supports this later implementation date because the regulatory details that are still underway play a crucial role for insurance companies.

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