EU Member States agreed last week to update rules on the sale of insurance products.

This agreement acknowledges that consumers who take out small insurances - for example against mobile phone loss or damage to eyeglasses - should be given clear and prior information on the respective insurance policies.

BEUC welcomes the fact that the Council has introduced product and governance requirements for insurance product manufacturers. These requirements stipulate that product manufacturers must place consumers’ best interests at the centre of every stage of product design, by e.g. stress testing products with target audiences. This is an important first step to avoid consumer detriment as it encourages insurance sellers to offer products which truly address consumers’ needs.

On the flipside, the Council decided to weaken the European Commission’s initial legislative proposal on insurance mediation in some regards:

• Tying insurance for another financial product e.g. a mortgage, or two insurance products together in one package will not be restricted.
• Life insurances with investment elements deserve the same regulatory regime as other substitutable investment products. The Council has weakened the European Commission proposal which planned to align both regimes.
• Consumers should know the salesperson’s profit prospects so as to reduce the problem of conflicts of interests. Disappointingly the Council decided that only the nature of commissions and fees should be disclosed to customers, not the actual amount.

The different EU institutions are now set for trialogue discussions in order to finalise the debate.