THE POLISH CHAMBER OF INSURANCE (PIU) TOGETHER WITH THE POLISH BANKS ASSOCIATION (ZBP), IN CONSULTATION WITH THE POLISH FINANCIAL SUPERVISION AUTHORITY OFFICE (KNF OFFICE), ARE DEVELOPING GOOD PRACTICES FOR CREDIT PAYMENT INSURANCE (CPI). THE ROAD MAP OF THE AGREEMENT WAS ANNOUNCED DURING PIU’S 10TH CONGRESS IN SOPOT. THE SELF-REGULATION WILL COMPLEMENT THE AMENDED RECOMMENDATION U, WHICH THE KNF OFFICE IS CURRENTLY DEVELOPING. THE PURPOSE OF GOOD PRACTICES IS TO INCREASE CPI PRODUCTS VALUE FOR CUSTOMERS, WHICH MEANS IN PARTICULAR EMPHASISING THE QUALITY ASPECTS OF THE PRODUCTS AND ENSURING THE PROPER DISTRIBUTION OF THESE PRODUCTS BY BANKS.
The amended Recommendation U has given rise to work on a common market standard developed by insurers and banks. Good practices are also a response to EIOPA expectations presented in the report entitled ‘Thematic Review on Credit Protection Insurance (CPI) sold via banks’ of 4 October 2022, concerning credit protection insurance (CPI) sold by banks, and in the EIOPA warning of 30 September 2022 addressed to insurers and banks.
The purpose of good practices is to increase the value of CPI products for customers and to ensure adequate quality of the processes of development and distribution of the products and their subsequent handling.
“This means that insurers and insurance distributors will establish a set of parameters affecting the product value for customers. These parameters will be monitored on a continuous basis throughout the product’s life, which will help us take the relevant measures to guarantee adequate product value for the customer”, explains Jan Grzegorz Prądzyński, President of the Management Board of PIU.
“Self-regulation will encompass several essential areas, from development of a CPI product, through its launch, to product related services and monitoring. The essential area which we want to regulate is the method of establishing the distributor’s fee”, says Tadeusz Białek, President of the Management Board of ZBP (Polish Banks Association).
Good practices will also include solutions that ensure sufficient exchange of information between insurers and insurance distributors and verification of information and marketing materials addressed to customers.
“Self-regulation is a huge undertaking. It is developed by several hundred people representing banks and insurers. We want to finish this document in October. This is a new quality in shaping market practice, and valuable experience which will translate to further cooperation between sectors and supervision”, says Grzegorz Prądzyński.
“As supervisors, we much appreciate the value of this cooperation. Complementing Recommendation U with good practices will help us develop lasting solutions favourable for customers, and incorporate the important market experience. The dialogue between the insurance sector, banks and the KNF Office during works intended to change the Recommendation U enhances the trust in the financial market in Poland and proves that the market is mature”, says Krystian Wiercioch, Deputy Chairman of the Polish Financial Supervision Authority, responsible for supervision of the insurance sector in the KNF Office. He adds that the work on good practices meets the KNF Office’s expectations regarding development of self-regulation of the financial industry in Poland as an instrument setting the standards for market operation, which is primarily in the interest of customers of this market.
“The role of cooperation and dialogue between financial market sectors is on the increase. Customers want to buy insurance in banks. They also want the purchasing process to be as simple as possible, and the products to meet their expectations”, adds Tadeusz Białek.
Recommendation U entered into force in 2015 in order to improve the quality of cooperation standards between banks and insurance companies in respect of insurance offered by banks. The Recommendation requires banks to comply with the obligation to inform and defines their role and the way in which they should act when offering group insurance. It also governs the issue of the use by customers of insurance agreements offered by various providers, with no need to accept the offer of a given bank. Recommendation U has implemented a number of additional customer-oriented elements in the process of insurance distribution by banks.
“Since 2015, a number of regulations governing insurance distribution were amended, and therefore it was necessary to amend the recommendations. The amendment currently being developed by the KNF Office also result from experience gained from supervision over insurance companies, banks and Savings and Credit Unions (SKOK)”, adds Krystian Wiercioch.