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Identify the target market and compatible customers |
Governance |
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- Description:
- For each insurance product, identify the target market and the group of compatible customers at a sufficiently granular level, taking into account the product and customer characteristics and sustainability factors.
- Frequency:
- One-time
- Check frequency:
- One-time
- Products/Services:
- Insurance products
- Checking responsibility:
- Manufacturers of insurance products
- Check method:
- Review of the product approval process and target-market identification.
- Rule set:
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- Source reference:
- Article 5(1)
- Source excerpt:
- The product approval process shall for each insurance product identify the target market and the group of compatible customers. The target market shall be identified at a sufficiently granular level, taking into account the characteristics, risk profile, complexity and nature of the insurance product, as well as its sustainability factors as defined in Article 2, point (24), of Regulation (EU) 2019/2088 of the European Parliament and of the Council
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Design and market target-market-compatible products |
Governance |
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- Description:
- Only design and market insurance products that are compatible with the needs, characteristics and objectives of customers belonging to the target market.
- Frequency:
- Continuous
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance products
- Checking responsibility:
- Manufacturers of insurance products
- Check method:
- Assessment of whether the insurance product is compatible with the target market’s needs, characteristics and objectives.
- Rule set:
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- Source reference:
- Article 5(3)
- Source excerpt:
- Manufacturers shall only design and market insurance products that are compatible with the needs, characteristics and objectives, including any sustainability-related objectives, of the customers belonging to the target market.
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Ensure staff competence |
Governance |
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- Description:
- Ensure that staff involved in designing and manufacturing insurance products have the necessary skills, knowledge and expertise.
- Frequency:
- Continuous
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance products
- Checking responsibility:
- Manufacturers of insurance products
- Check method:
- Review of the qualifications, knowledge and expertise of involved staff.
- Rule set:
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- Source reference:
- Article 5(4)
- Source excerpt:
- Manufacturers shall ensure that staff involved in designing and manufacturing insurance products has the necessary skills, knowledge and expertise to properly understand the insurance products sold and the interests, objectives, including any sustainability-related objectives, and characteristics of the customers belonging to the target market.
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Test insurance products |
Due Diligence |
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- Description:
- Appropriately test insurance products before marketing, significant adaptation or a significant target-market change, and assess whether they meet the identified needs, objectives and characteristics of the target market over their lifetime.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance products
- Checking responsibility:
- Manufacturers of insurance products
- Check method:
- Qualitative and, depending on the product and risk, quantitative product testing, including scenario analyses where relevant.
- Rule set:
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- Source reference:
- Article 6(1)
- Source excerpt:
- Manufacturers shall test their insurance products appropriately, including scenario analyses where relevant, before bringing that product to the market or significantly adapting it, or in case the target market has significantly changed. That product testing shall assess whether the insurance product over its lifetime meets the identified needs, objectives, including any sustainability-related objectives, and characteristics of the customers belonging to the target market. Manufacturers shall test their insurance products in a qualitative manner and, depending on the type and nature of the insurance product and the related risk of detriment to customers, quantitative manner.
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Do not market unsuitable products |
Governance |
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- Description:
- Do not bring insurance products to the market if product testing shows that they do not meet the identified needs, objectives and characteristics of the target market.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance products
- Checking responsibility:
- Manufacturers of insurance products
- Check method:
- Compare product-testing results with the target market’s identified needs, objectives and characteristics.
- Rule set:
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- Source reference:
- Article 6(2)
- Source excerpt:
- Manufacturers shall not bring insurance products to the market if the results of the product testing show that the products do not meet the identified needs, objectives, including any sustainability-related objectives, and characteristics of the target market.
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Monitor and review insurance products |
Due Diligence |
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- Description:
- Continuously monitor and regularly review insurance products to identify events that could materially affect their main features, risk coverage or guarantees, and assess continued consistency with the target market and distribution to that market.
- Frequency:
- Continuous
- Check frequency:
- Continuous
- Products/Services:
- Insurance products placed on the market
- Checking responsibility:
- Manufacturers of insurance products
- Check method:
- Continuous monitoring and regular review for material events and continued target-market consistency.
- Rule set:
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- Source reference:
- Article 7(1)
- Source excerpt:
- Manufacturers shall continuously monitor and regularly review insurance products they have brought to the market, to identify events that could materially affect the main features, the risk coverage or the guarantees of those products. They shall assess whether the insurance products remain consistent with the needs, characteristics and objectives, including any sustainability-related objectives, of the identified target market and whether those products are distributed to the target market or are reaching customers outside the target market.
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Maintain product distribution arrangements |
Governance |
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- Description:
- Ensure that product distribution arrangements prevent and mitigate customer detriment, support proper conflict-of-interest management and duly take customers’ objectives, interests and characteristics, including sustainability objectives, into account.
- Frequency:
- Continuous
- Check frequency:
- Continuous
- Products/Services:
- Insurance products
- Checking responsibility:
- Insurance intermediaries and insurance undertakings acting as distributors
- Check method:
- Review product-distribution arrangements against the required customer-protection and conflict-management objectives.
- Rule set:
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- Source reference:
- Article 10(2)
- Source excerpt:
- The product distribution arrangements shall: (a) aim to prevent and mitigate customer detriment; (b) support a proper management of conflicts of interest; (c) ensure that the objectives, interests and characteristics of customers, including any sustainability-related objectives, are duly taken into account.
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Inform the manufacturer about product issues |
Reporting |
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- Description:
- Promptly inform the manufacturer and, where appropriate, amend the distribution strategy when a product is inconsistent with the target market or other product-related circumstances may adversely affect customers.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance products
- Checking responsibility:
- Insurance intermediaries and insurance undertakings acting as insurance distributors
- Check method:
- Prompt notification to the manufacturer and, where appropriate, amendment of the distribution strategy.
- Rule set:
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- Source reference:
- Article 11
- Source excerpt:
- Insurance distributors becoming aware that an insurance product is not in line with the interests, objectives and characteristics of the customers belonging to its identified target market, including any sustainability-related objectives, or becoming aware of other product-related circumstances that may adversely affect the customer, shall promptly inform the manufacturer and, where appropriate, amend their distribution strategy for that insurance product.
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Assess conflicts of interest |
Due Diligence |
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- Description:
- Assess conflicts of interest arising in related distribution activities, including conflicts between customers, taking customers’ sustainability preferences into account.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance-based investment products and related distribution activities
- Checking responsibility:
- Insurance intermediaries and insurance undertakings
- Check method:
- Assess whether an interest of the company or connected persons is distinct from and capable of influencing the customer’s interest to the customer’s detriment.
- Rule set:
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- Source reference:
- Article 3(1)
- Source excerpt:
- insurance intermediaries and insurance undertakings shall assess whether they, a relevant person or any person directly or indirectly linked to them by control, have an interest in the outcome of the insurance distribution activities, which meets the following criteria: (a) it is distinct from the customer’s or potential customer’s interest in the outcome of the insurance distribution activities; (b) it has the potential to influence the outcome of the distribution activities to the detriment of the customer. Insurance intermediaries and insurance undertakings shall proceed in the same way for the purposes of identifying conflicts of interest between one customer and another.
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Gather investment objectives and sustainability preferences |
Due Diligence |
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- Description:
- When gathering information on investment objectives, where relevant also gather the intended holding period, risk-taking preferences, risk profile, investment purposes and sustainability preferences.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance-based investment products and investment advice
- Checking responsibility:
- Insurance intermediaries and insurance undertakings
- Check method:
- Gather investment objectives, risk tolerance, investment horizon and sustainability preferences at a level appropriate to the product or service.
- Rule set:
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- Source reference:
- Article 9(4)
- Source excerpt:
- The information regarding the investment objectives of the customer or potential customer shall include, where relevant, information on the length of time for which the customer or potential customer wishes to hold the investment, his or her preferences regarding risk taking, the risk profile, the purposes of the investment and, in addition, his or her sustainability preferences. The level of information gathered shall be appropriate to the specific type of product or service being considered.
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Do not recommend unsuitable products |
Due Diligence |
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- Description:
- Do not make a recommendation where no product is suitable, and do not recommend a product as meeting the customer’s sustainability preferences where it does not meet them.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance-based investment products
- Checking responsibility:
- Insurance intermediaries and insurance undertakings
- Check method:
- Suitability assessment before making a recommendation and comparison of products with the customer’s sustainability preferences.
- Rule set:
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- Source reference:
- Article 9(6)
- Source excerpt:
- When providing advice on an insurance-based investment product in accordance with Article 30(1) of Directive (EU) 2016/97, an insurance intermediary or insurance undertaking shall not make a recommendation where none of the products are suitable for the customer or potential customer. An insurance intermediary or insurance undertaking shall not recommend insurance-based investment products as meeting a customer’s or potential customer’s sustainability preferences where those insurance-based investment products do not meet those preferences.
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Explain and record reasons for non-recommendation |
Record Keeping |
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- Description:
- Explain to customers or potential customers the reasons for not recommending a product as meeting their sustainability preferences and keep records of those reasons.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance-based investment products and investment advice
- Checking responsibility:
- Insurance intermediaries and insurance undertakings
- Check method:
- Review and retention of the reasons for not making the recommendation.
- Rule set:
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- Source reference:
- Article 9(6)
- Source excerpt:
- The insurance intermediary or insurance undertaking shall explain to the customers or potential customers the reasons for not doing so and keep records of those reasons.
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Record adaptation of sustainability preferences |
Record Keeping |
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- Description:
- Keep records of the customer’s decision, including the reasons, where no insurance-based investment product meets the customer’s sustainability preferences and the customer adapts those preferences.
- Frequency:
- Event-triggered
- Check frequency:
- Event-triggered
- Products/Services:
- Insurance-based investment products and customer decisions on sustainability preferences
- Checking responsibility:
- Insurance intermediaries and insurance undertakings
- Check method:
- Record the customer’s decision and reasons when the customer adapts sustainability preferences.
- Rule set:
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- Source reference:
- Article 9(6)
- Source excerpt:
- Where no insurance-based investment product meets the sustainability preferences of the customer or potential customer, and the customer decides to adapt his or her sustainability preferences, the insurance intermediary or insurance undertaking shall keep records of the decision of the customer, including the reasons for that decision;
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Emtract Ingest