The new recommendation of thePrudential Supervision and Resolution Authority (ACPR) of November 21, particularly awaited by the sector, concerns the collection of information relating to the client for the exercise of duty of advice and the provision of a recommendation service personalized in insurance.
This aims to complete its 2013 recommendationwhich focused solely on life insurance and capitalization contracts. It is also part of the continuity of its recommendation of June 28, 2024on the implementation of certain provisions resulting from the Insurance Distribution Directive (IDD)which it completes on the exercise of the duty of advice and the provision of a personalized recommendation service.
Extension of the duty of advice to all insurance products
The scope of the recommendation has been extended to cover all insurance products, group or individual, excluding major risks referred to in Article L. 111-6 of the Insurance Code. The recommendation will come into force on December 31, 2025.
Excluded are collective contracts with compulsory membership and all contracts taken out by employers for employees and former employees. The recommendation does not relate to products which are no longer distributed and for which there is no tacit renewal, nor to capitalization and life insurance products comprising a surrender or transfer value and no longer allowing payment or arbitrage operations.
Preventing the risk of accumulation
For all insurance products (with the exception of capitalization and life insurance products with a surrender or transfer value), the ACPR recommends that distributors collect the informations relevant to the subscriber or potential member with regard to the product offered as well as their requirements and needs, including the extent and level of coverage desired, in order to advise them on a contract consistent with their requirements and needs.
They must also draw the attention of the subscriber or potential member to the risk of insurance accumulation linked to the prior holding of a contract covering at least in part the same risks or the same need in order to ensure the interest in concluding a new contract. The control actions carried out by the ACPR have notably led it to specify the need for distributors to communicate with their customers in order to prevent this risk of involuntary accumulation of insurance covering the same risk.
Guarantee a duty of advice over time in non-life insurance
The ACPR recommends implementing a duty to advise in the duration in non-life insurancein order to verify that the insurance product still covers the needs of the insured. Distributors will also have to exercise increased vigilance in the event of surrender of a life insurance contract accompanied by a new subscription.
Inform about the risks linked to UC and PER
When the advice concerns units of account (UA)the ACPR more particularly recommends that distributors draw the attention of the member or potential subscriber to the risks linked to the selection of these UC, with regard to the character variable of their value as well as the existence, where applicable, of compensation reducing the redemption or transfer value and their consequences on the terms of exercise of the redemption or transfer option.
Regarding the individual retirement savings plan (PER) giving rise to subscription to an insurance contract, the ACPR recommends that distributors draw the attention of the potential member to the unavailable nature of the invested savings and to the terms of early exit.
Integrate Sustainability Preferences
Finally, updating the recommendation takes into account the integration of customer preferences in terms of sustainability in the duty of advice in life insurance. In this respect, the Authority recommends that distributors provide customers with clear, accurate and non-misleading information allowing them to invest knowingly based on their preferences in non-financial matters. They must also explain in advance to the member or potential subscriber what the sustainability preferences are, and in particular the distinction between them.
