EIOPA’s announcement describes a Staff Paper setting out a four-pillar framework to help supervisory authorities apply behavioral insights in their conduct of business supervision, with the ultimate goal of improving consumer outcomes.
Why EIOPA Looks at Consumer Decision-Making
According to the announcement, understanding how consumers make financial decisions in practice can help explain why some remain underinsured against natural catastrophes, fail to plan adequately for retirement or buy insurance products that do not meet their needs. InsuraBeat has separate coverage of EIOPA Opens Consultation on Draft Supervisory Statement for IBIP Sales.
The Building Blocks of the Framework
The announcement states that the paper sets out four building blocks for integrating behavioral insights into supervisory work.
- The first building block listed in the announcement: Defining and assessing consumer outcomes, focusing on consumers’ financial health.
- The second building block listed in the announcement: Understanding consumer behavior in practice, examining how consumers make decisions and the factors that influence their choices.
- The third building block listed in the announcement: Considering interventions at different levels, including market, product and distribution level rather than solely targeting changes in the behavior of individuals.
- The fourth building block listed in the announcement: Combining evidence-gathering methods, using appropriate research methods to understand behavior and assess the effectiveness of interventions.
InsuraBeat has separate coverage of EIOPA Highlights Financing, Reinsurance and Governance for PE-Backed Insurers.
Examples Drawn From EIOPA’s Work
In the announcement, EIOPA states: The paper illustrates the proposed approach through three examples from EIOPA’s work: the natural catastrophe insurance protection gap, credit protection insurance sold through banks, and the sales process for insurance-based investment products. InsuraBeat has separate coverage of EIOPA Peer Review Follow-Up: NCAs Close POG Gaps Unevenly.
Status of the Staff Paper
The announcement says the paper represents the views of EIOPA’s staff views. In the same announcement, EIOPA says the paper is intended as a practical guide for informational purposes and does not impose any new requirements on supervisors.
