FI Supervision 27: Non-life insurance undertakings’ product approval processes

Insurance undertakings must ensure that the insurance products they develop and provide meet consumer needs. Consumers should not be offered insurance they do not need. To ensure this, undertakings must have a functioning internal process for product approval.

FI's analysis presents several good examples of how undertakings work with and apply the product approval process. Among other things, we have seen that over half of the undertakings assess the value an insurance product holds for the consumer in relation to its premium and that several of the undertakings take customer complaints into consideration in various parts of the process. FI has also observed that almost all the undertakings have established a target group for all their insurance products, not only for the products developed or significantly changed by the undertaking since the rules of the product approval process came into force. These are a few examples of how undertakings can create the conditions for ensuring that insurance products fulfil consumer needs.

We have also noted that there seems to be uncertainty in the industry on whether add-on cover should be considered an insurance product on its own based on regulatory definitions and thereby should be subject to the process of product approval. The fact that the regulatory framework is not applied uniformly in this respect is problematic and gives rise to the need for FI to follow up on the issue.

The product approval process is central for the undertakings, and in the interest of consumer protection, they must work with it continuously. FI will continue to monitor the undertakings' work with and application of the process as part of our ongoing supervision.