For newly developed insurance products and to existing products where significant changes have been made to the product, insurance distributors must put in place product distribution arrangements containing appropriate measures and procedures to obtain from the manufacturer all appropriate information on the insurance products they intend to offer to their customers and to fully comprehend those insurance products, taking into account the level of complexity and the risks related to the products as well as the nature, scale and complexity of the relevant business of the distributor.
Insurance distributors are to set out the product distribution arrangements in a written document and make it available to their relevant staff.
The purpose of the product distribution arrangements is to prevent and mitigate customer detriment, support proper management of conflicts of interest and ensure that the objectives, interests and characteristics of customers are duly taken into account.
The product distribution arrangements must ensure that the insurance distributors obtain from the manufacturer the following information;
− Information about the insurance product,
− the identified target market,
− suggested distribution strategy,
− information on main features,
− characteristics of the insurance products,
− their risks and costs, including implicit costs, and
− any circumstances which might cause a conflict of interest to the detriment of the customer.
Any specific distribution strategy set up or applied by insurance distributors should match the target market and the distribution strategy identified by the manufacturer.
Insurance distributors must regularly review their product distribution arrangements to ensure that those arrangements are still valid and up to date.
Insurance distributors must determine the appropriate intervals for the regular review of their product distribution arrangements, thereby taking into account the size, scale and complexity of the different insurance products involved.
To support product reviews carried out by manufacturers, insurance distributors shall upon request provide manufacturers with relevant sales information, including, where appropriate, information on the regular reviews of the product distribution arrangements.
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