The Insurance Distribution Directive, adopted in 2016, strengthened the focus on customer protection—and product oversight and governance (POG)—in the European insurance sector. One of the key challenges is the requirement for companies to assess value for money (VfM) from the customer’s perspective by demonstrating that the insurance product provides intrinsic value perceived by the customer. This report aims to provide an overview of the regulatory frameworks and market best practices for assessing VfM in property and casualty (P&C) insurance across eight European countries: Italy, Spain, Portugal, Germany, Austria, Greece, Poland and Romania.
From a regulatory perspective, national authorities have treated the Insurance Distribution Directive in different ways. Some have granted insurance companies significant freedom in defining their own methodology for the value for money assessment, while others have provided more specific guidance or recommendations on the indicators, thresholds and criteria to be used in the assessment.
From an operational perspective, the main differences across the countries relate to not only the methodology used, but also how insurance companies translate regulatory guidance into practical processes and measures. Most insurers included in the research have adopted methodologies based solely on one set of indicators.
Overall, the research shows that value for money for P&C products is gradually becoming part of the assessment and monitoring processes of European insurance companies, although the level of maturity and the approaches adopted still vary across markets. The research includes two main areas of focus: mapping of the local regulatory framework and benchmarking of market practices.
Key sections of the report include the following.
- Introduction: Background on the Insurance Distribution Directive, its requirements for countries, handling of insurance products, and mandate given to the European Commission.
- Local regulation: An assessment of how national competent authorities in various markets have transposed and implemented the POG requirements, with a focus on the VfM assessment for P&C products.
- Best practice: A summary of what has been implemented for VfM assessment for P&C products across the regions.