On 19 December, EIOPA published its 2019 Consumer Trends Report, which outlines major developments in the insurance and pensions sectors affecting European consumers.
Based on EIOPA’s findings, both life and non-life insurance penetration rates increased across the European Economic Area (EEA). The Report also highlights that:
- Transparency and disclosure of information to consumers has improved.
- The digitalisation of the sector continues to take shape.
- In most EU countries, accident and health insurance products continue to appear ‘good value for money’.
Areas that could cause potential consumer detriment continue being reported, with possible risks for consumers across the product lifecycle. The following areas stand out:
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- Unit-linked insurance, which according to EIOPA remains a challenging product from a consumer perspective.
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- Credit life/credit protection insurance, which according to EIOPA continues raising concerns due to high-commissions, aggressive sales tactics and overall low value for money, though it has the potential of offering significant benefits to consumers.
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- Insurance products sold in connection with the purchase of other goods or services, as according to EIOPA the sale of these products can happen through aggressive sales tactics where consumers do not pay enough attention to what is covered and to what is excluded.
- Claims management in motor insurance, as the Report shows that motor insurance related complaints continued to increase.
On the pension side, with life expectancy increasing, a strain is being put on the decumulation phase. To address this issue, changes and innovations – such as lifecycling or delayed retirement – are taking place.
In relation to non-life insurance, innovations in the motor insurance are noteworthy, with an increase in policies being sold through comparison websites and an increasing uptake of telematics. However, motor insurance-related complaints, due to claims management issues, continue to be the most prevalent complaints and have increased by 6% at the EEA level. 2
Furthermore, this year’s Report focuses on the digitalisation of the insurance sector and, in particular, on the innovations affecting the way in which insurance products are presented and distributed to consumers. Despite the benefits for both insurers and consumers, the Report suggests that financial innovations should be adequately designed and properly implemented.
Looking ahead, although according to EIOPA the regulatory changes that came into force in 2018 (IDD and PRIIPs) are already showing some positive developments — mainly in relation to disclosures — it is anticipated that there will be an increased focus on product oversight governance to ensure that products are adequately designed and targeted, thereby ensuring good consumer outcomes.