Commission Delegated Regulation (EU) 2017/2358 of 21 September 2017 supplementing Directive (EU) 2016/97 of the European Parliament and of the Council with regard to product oversight and governance requirements for insurance undertakings and insurance distributors (Text with EEA relevance. )

CHAPTER I

GENERAL PROVISIONS

Article 1

Subject

This Regulation lays down rules for the maintenance, operation and review of product oversight and governance arrangements for insurance products and for significant adaptations to existing insurance products before those products are brought to the market or distributed to customers (‘product approval process’), as well as rules for product distribution arrangements for those insurance products.

Article 2

Scope

This Regulation shall apply to insurance undertakings and to insurance intermediaries that manufacture insurance products that are offered for sale to customers (‘manufacturers’), as well as to insurance distributors that advise on, or propose, insurance products that they do not manufacture.

Article 3

Manufacturing insurance products

CHAPTER II

PRODUCT GOVERNANCE REQUIREMENTS FOR MANUFACTURERS

Article 4

Product approval process

The product approval process shall:

(a) ensure that the design of insurance products meets the following criteria: (i) it takes into account the objectives, interests and characteristics of customers, including any sustainability-related objectives; (ii) it does not adversely affect customers; (iii) it prevents or mitigates customer detriment;

(b) support a proper management of conflicts of interest.

The manufacturers' body or structure responsible for the manufacturing of insurance products shall do all of the following:

(a) endorse and be ultimately responsible for establishing, implementing and reviewing the product approval process;

(b) continuously verify internal compliance with that process.

Article 5

Target market

Article 6

Product testing

Article 7

Product monitoring and review

Article 8

Distribution channels

The information referred to in paragraph 2 shall enable the insurance distributors to:

(a) understand the insurance products;

(b) comprehend the identified target market for the insurance products;

(c) identify any customers for whom the insurance product is not compatible with their needs, characteristics and objectives, including any sustainability-related objectives;

(d) carry out distribution activities for the relevant insurance products in accordance with the best interests of their customers as prescribed in Article 17(1) of Directive (EU) 2016/97.

Article 9

Documentation

Relevant actions taken by manufacturers in relation to their product approval process shall be duly documented, kept for audit purposes and made available to the competent authorities upon request.

CHAPTER III

PRODUCT GOVERNANCE REQUIREMENTS FOR INSURANCE DISTRIBUTORS

Article 10

Product distribution arrangements

Insurance distributors shall set out the product distribution arrangements in a written document and make it available to their relevant staff.

The product distribution arrangements shall:

(a) aim to prevent and mitigate customer detriment;

(b) support a proper management of conflicts of interest;

(c) ensure that the objectives, interests and characteristics of customers, including any sustainability-related objectives, are duly taken into account.

Insurance distributors shall 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.

Article 11

Informing the manufacturer

Insurance distributors becoming aware that an insurance product is not in line with the interests, objectives and characteristics of the customers belonging to its identified target market, including any sustainability-related objectives, or becoming aware of other product-related circumstances that may adversely affect the customer, shall promptly inform the manufacturer and, where appropriate, amend their distribution strategy for that insurance product.

Article 12

Documentation

Relevant actions taken by insurance distributors in relation to their product distribution arrangements shall be duly documented, kept for audit purposes and made available to the competent authorities upon request.

CHAPTER IV

FINAL PROVISIONS

Article 13

Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from the date from which Member States are to apply the measures referred to in the first subparagraph of Article 42(1) of Directive (EU) 2016/97.

This Regulation shall be binding in its entirety and directly applicable in all Member States.