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European Insurance and Occupational Pensions Authority
News article15 December 2023

EIOPA consults on its methodology for setting value-for-money benchmarks

Consumer protection: disclosure event

The European Insurance and Occupational Pensions Authority (EIOPA) has launched today a public consultation on its proposed methodology for setting value-for-money benchmarks for unit-linked and hybrid insurance products. This work is not related to the benchmarks proposed by the European Commission under the Retail Investment Strategy. It is part of the toolkit EIOPA began developing in 2020 to provide supervisors with additional risk-based tools and enhance their ability to identify products in their markets that may not deliver fair value for money.

While well-designed and transparently priced unit-linked and hybrid insurance products can offer significant benefits to consumers, supervisors across Europe have consistently reported issues with some pockets of unit-linked and hybrid market over the years. Supervisory issues often stemmed from the high complexity of these products or the mismatch between consumers’ expected returns and the actual benefits received.

To tackle these concerns and proactively identify products offering poor value for money to consumers, EIOPA made addressing value-for-money risks a key priority as early as 2020. With the launch of this public consultation, EIOPA aims to develop a methodology for value-for-money benchmarks in unit-linked and hybrid products that would become an essential component of the toolkit EIOPA has been developing to effectively deal with these risks.

The Consultation Paper published today outlines a three-step approach to creating these reference benchmarks:

Step 1: EIOPA proposes a system to categorize unit-linked and hybrid insurance products with similar features into groups based on policyholders’ needs. This fundamental step intends to bring much-needed comparability to a market characterized by highly diverse products.

Step 2: Building on an earlier methodology from October 2022, EIOPA suggests indicators around which value for money benchmarks should be developed. The indicators outlined in this paper revise and supplement those proposed earlier.

Step 3: The third step concerns data collection and benchmark calibration. To minimize the reporting burden on the market, EIOPA recommends leveraging existing data collection processes, such as the one for the annual Cost and Past Performance report.

Read the Consultation Paper

Consultation process

EIOPA invites stakeholders to provide feedback on the proposals presented in the Consultation Paper via the online survey. The deadline for the submission of comments is 15 March 2024.

Related publications

EIOPA issued a Supervisory Statement in November 2021 which offered a definition of value-for money and underlined value-for-money-related principles in existing regulation. This statement was followed by a methodology document in October 2022 that lay the foundations of a common European approach to identifying, monitoring and mitigating risks related to unit-linked products that offer poor value for money to consumers. The current Consultation Paper builds upon the insights of these previous publications.

The methodology released today is independent of the European Commission’s Retail Investment Strategy but may inform EIOPA’s work in this field.


Publication date
15 December 2023