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European Insurance and Occupational Pensions Authority
News article20 February 2019

EIOPA sets out framework for identifying conduct risks

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published a framework for assessing conduct risk through the product lifecycle.

The purpose of the framework is to clarify drivers of conduct risk and their implications in the emergence of consumer detriment. It pro­vides an aid for understanding issues faced by con­sumers and input on the types of conduct risks EIOPA and the national competent authorities (NCAs) should focus on. It sets a common starting point for more practical supervision of particular products, ser­vices or market segments, for instance, through "deep dive" thematic work or for future policy development. A strong view on conduct risks is essential for evidence-based and risk-based pre­ventative conduct of business supervision.

The framework focuses on conduct risk throughout all stages of the product lifecycle, that is to say, from the point before a contract enters into force through to the point when all obligations under the contract have been sat­isfied.

The risks set out in this framework cover the following areas:

  • Business model and management risks – risks arising from how undertakings structure, drive and manage their business and from relationships with other entities in the value-chain.
  • Manufacturing risks – risks arising from how prod­ucts are manufactured by insurance undertakings prior to being marketed and how they are targeted to customers.
  • Delivery risks – risks arising from how products are brought to the market and from the interaction between customers and insurance undertakings or intermediaries at the point of sale.
  • Product management risks – risks arising after the sale of the insurance product relating to how prod­ucts are managed and how insurance undertakings or intermediaries interact with and service customers until all obligations under the contract have ceased.

While the framework is not setting out supervi­sory processes at national level, it nonetheless supports NCAs in identifying conduct and consumer protection risks sufficiently early and sufficiently clearly for the preventative goals of effective con­duct supervision, further enhancing market monitoring and conduct risk assessment and driving forward prac­tical supervisory convergence. It provides a catalogue of risks to consider in practical supervisory work.

Going forward, EIOPA expects the framework to con­tribute to the effective implementation of EIOPA's Conduct of Business Supervision Strategy. EIOPA anticipates further work in linking the identified conduct risks with the tools for assessing their impact and supervisory importance, leveraging readily available data as far as possible. This approach will evolve into more systematic ongo­ing conduct risk monitoring as an integral part of practical supervision both at national and European levels. It in­cludes, for instance, the development of periodic con­duct risk dashboards as a platform for high-level debate and convergence on the evolving conduct risk landscape.


Publication date
20 February 2019