Is product testing required for existing products? Is product review required for existing products?
The answer to this question is provided by the European Commission.
Both questions concern the application of the product oversight and governance rules set out in Article 25 of the Directive 2016/97/EU (Insurance Distribution Directive – IDD) to existing products (i.e. products which are already in the market at the date of application of the relevant national legislation transposing the IDD). Article 25(1) IDD provides that insurance undertakings, as well as intermediaries which manufacture any insurance product for sale to customers, shall maintain, operate and review a process for the approval for (1) each insurance product, or (2) significant adaptation of an existing insurance product before it is marketed or distributed to customers. The different requirements of Article 25 IDD are specified in more detail in the Delegated Regulation (EU) 2017/2358 (see, in particular, Article 6 on product testing and Article 7 on product monitoring and review). According to Article 4(1) of the Delegated Regulation (EU) 2017/2358, manufacturers have to maintain, operate and review a product approval process “for newly developed insurance products and for “significant adaptations of existing insurance products”. It follows that existing insurance products are only covered by the requirements of Article 25 IDD if they are subject to “significant adaptations”. For product which continue to be marketed without significant adaptations, manufacturers therefore do not have to comply with the product oversight and governance requirements. This applies to product testing and product review as the review is explicitly mentioned in Article 25(1) IDD as an element of the product approval process.
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.