Regulatory priorities and operational impacts in the insurance sector
Table of Contents
Customer protection is now a priority for regulators, in particular the ACPR, which has intensified its controls on products such as funeral insurance and life accident guarantees. At the same time, European initiatives such as the “value for money” strategy and the “retail investment strategy” aim to strengthen the transparency and quality of products for retail investors.
However, these issues should not be considered solely from a regulatory perspective, as they have major operational consequences for insurance companies. They affect the entire value chain, from development and distribution to technical management, including support functions. Thus, these transformations affect the organization in all its dimensions: organizational, human resources, processes and information systems. Companies must therefore adapt to ensure both compliance and efficiency of their activities.
Operational issues of customer protection (PIC)
- ACPR recommendation 2024 R-03 on customer protection (PIC) results from in-depth checks on compliance with regulations regarding the distribution of insurance products. These strengthen the management of conflicts of interest and the duty to advise (DDC), while emphasizing the importance of in-depth knowledge of clients.
- Customer protection issues directly impact the operations of insurance companies. Distribution must therefore better integrate these concerns by adapting customer journeys to improve customer knowledge and comply with DDC obligations.
- At the same time, management must guarantee the completeness and updating of customer data. To meet Customer Protection requirements, the control and reporting process must be strengthened, supported by an information system that automates the collection, traceability and archiving of data.
- In addition, information systems must facilitate the industrialization of delivery, digitalization and traceability of customer advice and choices through tooled processes.
Operational challenges of the retail investment strategy (RIS)
- At the same time, the regulation on retail investment strategy, introduced by the European Commission, aims to make investment more accessible and understandable for non-professional investors. This initiative promotes increased transparency, protects retail investors and strengthens financial education, while seeking to better link product offerings to identified needs in the market.
- The operational implications are significant: the simplification of the unit of account (CU) offering must be integrated by the design teams and ensure the adequacy between the product offering and the identified needs, while distribution sees its advisory role reinforced.
- Management must also anticipate the impact of the deindexation of uncompetitive CUs and plan for a reduction in management fees.
- In this context, the sovereign functions of the insurance company become essential to ensure product monitoring and governance. CIOs play a key role in adapting product management tools and automating governance processes.
Operational issues of value for money (VFM)
- Finally, the ACPR integrates the notion of value for money (VFM) in recommendation 2024 R-01, requiring that insurance products offer value proportionate to the costs borne by policyholders. This requires a rigorous assessment of the associated costs and benefits.
- The consequences on the insurance value chain are multiple: the design of offers must be rethought to guarantee a match between price and perceived value, while distribution must favor transparency and customer information.
- The investment control function must oversee the governance process taking into account value for money.
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