While insurance is not in the scope of the Markets in Financial Instruments Directive investor protection regime, it is important for the industry to take every opportunity to contribute to the RIS debate to ensure that it results in the best outcome for retail investors.
Insurance-based investment products (IBIPs) account for almost 90% of the current Packaged Retail and Insurance-based Investment Products (PRIIPs) market (which accounted for around five trillion euro of assets under management in 2019), so it is vital that the future framework respects IBIPs' specific features and enables consumers to take better informed decisions.
Specifically, the RIS should examine how to better explain the characteristics of different products, rather than trying to adopt a common approach for all financial products. For example, the PRIIPs Key Information Document (KID) should prominently display the existence or lack of insurance cover, guarantees or other capital protection mechanisms, and allow adequate space to explain the benefits that insurance products offer.
Furthermore, the regulatory framework must be digital-friendly for all products and services. EU rules should be amended to be digital by default, with information provided on paper when requested by the consumer. It is also important to ensure that new entrants to the market, such as BigTech, are subject to the same regulatory and supervisory framework to ensure a level playing field and to maintain a consistently high level of consumer protection.
Moreover, action is needed to increase financial literacy across Europe, which is essential to enable citizens to take charge of their personal finances. Here the Commission should play a greater role: for example, by supporting the development and implementation of national strategies for financial literacy and education, including insurance education.
Finally, any review should not be rushed. Extensive technical and consumer testing and an adequate timeline for the consultation of stakeholders are essential. To ensure the best outcomes for consumers, it is also key to allow sufficient time for the implementation of any new rules.