PRIIPS review: The KID should clearly indicate existence or lack of insurance covers, guarantees or other capital protection mechanisms


Insurance Europe has published its response to a call for advice from the European Supervisory Authorities (ESAs) on the European Commission’s upcoming review of the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation.

The review of the PRIIPs framework should aim to result in an overall simplification to improve the clarity and usefulness of the Key Information Document (KID). Specifically, Insurance Europe made the following proposals:

  • The PRIIPs KID should prominently display the existence or lack of insurance covers, guarantees or other capital protection mechanisms, and allow adequate space to explain the benefits that insurance products offer.
  • Certain immediate annuities and funeral products — that are wrongly captured by the Level 1 definition — should be excluded from the PRIIPs scope, and the current exemptions for pension products should be retained. This is a necessary condition for providing meaningful disclosures to consumers.
  • The number of figures in the PRIIPs KID should be reduced. For example, the KID includes a number of figures on costs, charges, and intermediate time periods that are not appropriate for long-term products.
  • The requirement to provide the PRIIPs KID on paper by default is outdated. Pre-contractual documents should be available in an electronic format by default, but on paper on request. The use of layering and cross-referencing through hyperlinks should also be promoted.
  • A significant number of the PRIIPs sold by insurers are multi-option products (MOPs), which provide consumers with a wider choice. The current approach for MOPs gives product manufacturers the necessary flexibility and must be retained.
  • Clarity on the fixed information is important, but some flexibility in the wording of the narratives would be helpful.
  • Any review of the PRIIPs framework should not be rushed. Extensive technical and consumer testing in all countries and an adequate timeline for stakeholder consultation are key. To ensure consumers receive high quality information, it is vital to allow sufficient time for the implementation of any new provision.

As a general observation, the deadline set by the European Commission for the ESAs to deliver technical advice is too short and creates severe limitations. In particular, the timeframe to respond to the ESAs’ call for evidence (eight weeks instead of the full length of time normally allocated for the consultation of stakeholders, which is 12 weeks) restricts respondents’ ability to explore in depth the issues set out in the call for evidence.