The Product Oversight and Governance requirements would apply to both compulsory and optional group insurance contracts. 

As regards compulsory group insurance contracts, these are referred to in Recital 49 of the IDD where the representative of a group of members concludes an insurance contract on behalf of the members where the individual member cannot take an individual decision to join, such as occupational pension arrangements. However, the application of this provision is specific to conduct of business rules such as information disclosure and suitability requirements for individual requirements at the point of sale. Product Oversight and Governance requirements serve a different regulatory objective, concerning the design of products for a wider group of customers. For this reason, the members should be considered as customers with regard to the application of Product Oversight and Governance requirements.

In practical terms, optional group insurance contracts are where the insurance contract is negotiated and concluded by a single legal person (“master policyholder”) for a group of potential individual members. In contrast to compulsory group insurance contracts, the members adhere to the group insurance contract on a voluntary basis. This scheme can be found in some Member States, in particular for travel insurance products, mobile phone insurance products, health insurance coverage and even insurance-based investment products. The master policyholder may be, for instance, a credit institution or an association, which may be registered or not as an insurance intermediary or an ancillary insurance intermediary depending on whether insurance distribution activities are carried out. The members are their customers. As for all group insurances, these members pay premiums and benefit from the insurance coverage. Moreover, for optional group insurances, it is in the discretion of the individual member to subscribe the contracts. 

Taking into consideration that in both cases (compulsory and optional group insurance contracts), the members are considered as customers with regard to the application of Product Oversight and Governance requirements, consequently, the target market has to be defined, taking into account the features of the insurance product as well as the needs and objectives of the members.