Bernardino says industry needs to examine conflicts of interest
The mis-selling of insurance products has been fuelled by agencies’ incentive arrangements, according to Europe’s top insurance regulator.
Eiopa (European Insurance and Occupational Pensions Authority) chairman Gabriel Bernardino said today that the industry needed to take a top down look at conflicts of interest.
Speaking at the recently established agency’s first consumer strategy conference, he said: “We need to take a courageous look at conflicts of interest. Unfair practices leading to consumer detriment in the insurance and pensions market are often due to situations of conflicts of interest.
“Insurance is an industry where agency incentives can be the main driver of the kind of product to be sold. Sometimes these results in the sale of products which are not suitable for the consumers concerned.”
As part of a paradigm shift in the area of consumer protection, Bernardino said that “early intervention” in the development and selling of products was “the key to prevent consumer detriment”.
He said that selling practices, whether through intermediaries or direct writers, should meet “certain high standards”.
Eiopa will be feeding into the European Commission’s revision of the Insurance Mediation Directive (IMD), which provides an umbrella for the UK’s regulation of insurance intermediation, during 2012.