The insurance investment
products within the regulatory
framework of the IMD2 proposal
Athens - 8 May 2014
Prof. Ph.D. Pierpaolo Marano
Professor of Insurance law
Catholic University of the Sacred Heart
Milan
Where Do You Get the Rules on IIP?
IMD2
PRIPs
MiFID2
A direct reference to PRIPs Regulation:
Definition of IIP as IP under PRIPs
• Applies to all investment products intended for small
investors but would not apply to:
• non-life insurance products;
• life insurance contracts where the benefits under the
contract are payable only on death or in respect of
incapacity due to injury, sickness or infirmity, or
deposits other than structured deposits and
securities.
• The new rules still need to be officially endorsed by
the member states.
• They would then take effect within two years
An indirect reference to PRIPs Regulation:
Documentation (KID) for retail investors
"What is this investment?“
"Could I lose money?"
"What is it for?“
"What are the risks and what might I get back?"
"How has it done in the past?"
"What are the costs?"
“"What might I get when I retire?“ (pension
funds only)
MiFID and IMD2: Are they the mother
and daughter?
• Rules for IIP aligned with conduct of business
rules included in MiFID II;
• Stricter conflicts of interest regime;
• Independent advice (no commissions) for IIP based on developments of MiFID II proposal;
• Assessment of suitability and appropriateness
test;
• Product governance
• EU Commission delegated acts – EIOPA’s Advice
MiFID2: Business conduct rules
• MiFID II will extend some of the information
to clients and conflict of interest requirements
to insurance-based investment products by
amending the Insurance Mediation Directive
2002/92/EC.
Rules for investment advice
• The rules for investment advice are improved both when
advice is provided on an independent basis and in the long
term.
• Advisers declaring themselves as independent will need to
match the client's profile and interests against a broad array
of products available in the market and say whether they will
provide the client with a periodic assessment of the
suitability of advised products.
• Independent investment advisers and portfolio managers will
be required to transfer all fees, commissions or any monetary
benefits paid or provided by a third party to the client who
should be accurately informed about all such commissions.
MiFID2:Product governance
• The involvement of senior management
in the design of the firm's policies as to
how products and services may be sold
or provided to their clients and the
adoption of adequate internal controls is
consolidated.
MiFID and European Authorities
• MiFID II introduces harmonised powers and
conditions for national competent authorities,
the European Securities and Markets
Authority (ESMA) and the European Banking
Authority (EBA) [EIOPA?] to prohibit or restrict
the marketing and distribution of certain
financial instruments and structured deposits,
financial activities or practices in case of
threats to investor protection, financial
stability or the orderly functioning of markets.