Do the product oversight and governance (POG) requirements in Article 25 of the IDD apply to any insurance product independent from the question for how many customers the insurance product has been designed?
The answer to this question is provided by the European Commission.
According to Article 25(1) of the Directive 2016/97/EU (Insurance Distribution Directive - IDD), “insurance undertakings, as well as intermediaries which manufacture any insurance product for sale to customers” are obliged to comply with the product oversight and governance requirements set out in this provision for each insurance product. The obligation applies therefore to all kinds of insurance products. The article contains no elements that could justify an exclusion of “tailor-made” products designed for one customer or very few customers. This result is further confirmed by the explicit statement in recital 1 of the Delegated Regulation (EU) 2017/2351 that the product oversight and governance requirements set out in Article 25 IDD should apply to all insurance products “irrespective of the type of product and of the requirements applicable at the point of sale”. However, the second subparagraph of Article 25(1) IDD specifies that “the product approval process shall be proportionate and appropriate to the nature of the insurance product”.
The Delegated Regulation (EU) 2017/2351 states further in recital 2 that “product oversight and governance measures should be chosen and applied in a proportionate and appropriate manner, depending on the complexity of the product and the degree to which publicly available information can be obtained, taking into account the nature of the insurance product and the risk of consumer detriment related to it, the characteristics of the target market and the nature, scale and complexity of the relevant business of the manufacturer or distributor”. An insurance undertaking or intermediary that manufactures a “tailor-made” product would therefore have to comply with the product oversight and governance requirements set out in Article 25 IDD in a manner that is proportionate to and appropriate for the specific character of that insurance product.
The disclaimer provided by the European Commission:
The answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies, in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.