Rather than improve the quality of information in the PRIIPs Key Information Document (KID) — which is intended to inform consumers about insurance-based investment products (IBIPs) — the proposals would:
• Increase the complexity of the methods and presentation of information, making it even more difficult for consumers to understand.
• Lead to misleading figures being given to consumers.
• In general, overload consumers with information.
Insurance Europe also has serious concerns about the “quick-fix” approach taken in the ESAs’ consultation. It is vital that any new measures address the underlying problems with the PRIIPs KID and do not attempt to find superficial and ineffective solutions.
The ESAs therefore must conduct a more well-considered and better evidenced approach when proposing amendments. It needs to be clearly demonstrated that consumers will benefit from any alterations, given the significant compliance costs those changes will impose on insurers.
Fundamental changes that are required to address flaws in the PRIIPs KID should therefore only be considered as part of the official overall review foreseen by the PRIIPs Regulation. Such amendments require a thorough impact assessment and proper, holistic consumer testing of all aspects of the KID, to ensure that consumers are provided with meaningful information.
Insurance Europe’s other concerns include:
• The introduction of any interim measures must be avoided, as they would incur additional compliance costs without achieving any added value for consumers. Repeatedly changing the presentation and the contents of the PRIIPs KID only confuses consumers and undermines their trust in the PRIIPs KID.
• Proposals to integrate more features from the UCITS key investor information document (KIID) into the PRIIPs KID, would make it even less suitable for IBIPs, and even more confusing for consumers. IBIPs represent around 80% of the current PRIIPs market, and the PRIIPs KID must therefore be fit for insurance products.
• Proposed changes for multi-option products (MOPs) would be particularly burdensome for insurers to implement and not add any value for consumers. On the contrary, the introduction of additional layers of information, including cross-references, and complex costs tables for MOPs would confuse consumers and expose insurers to significant liability risks.
The full response to the consultation is available here.
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