Question ID: 1639
Regulation Reference: (EU) No 2017/2359 - info requirements and conduct of business rules applicable
Topic: Other
Status: Final
Date of submission: 10 Jul 2018
Question
What are insurance distributors expected to do if the insurance product is not suitable for the individual customer or the suitability cannot be determined but the customer still wishes to conclude the contract – can the contract still be concluded?
EIOPA answer
It is relevant to mention that this answer is subject to Member State implementation, for example whether advice is mandatory.
Paragraph 5 and 6 of Article 9 of Delegated Regulation 2017/2359 cover the cases where a recommendation cannot be made due to the insurance intermediary or the insurance undertaking not obtaining the necessary information or there being no products that are suitable for the customer or potential customer.
In these circumstances the customer may agree to proceed with concluding the contract as a sale without advice (in conformity with the applicable rules of national law), and subject to an assessment of appropriateness unless it is possible to sell the contract on an execution only basis, (see recital 12 of Delegated Regulation 2017/2359). Where the distributor cannot obtain the necessary information to assess the appropriateness of the contract, the distributor shall warn the customer that the contract might not be appropriate. Only when the customer asked to proceed with concluding the contract despite this warning, the distributor may perform the sale.
In all cases, Article 20(1), IDD provides that any contract proposed must always be consistent with the demands and needs of the customer.