Impact of Solvency II and IDD on Bancassurance in the EU and Greece: Consumer Protection, Distribution, and Credit Insur

1. Bancassurance in the EU and in Greece: The impact of Solvency II on credit insurance and the IDD impact on borrower insurance VIth AIDA EUROPE CONFERENCE (Vienna, 3-4 November 2016) Joint Working Party meeting: Consumer Protection & Dispute Resolution, Distribution of Insurance Products, Credit Insurance & Surety “Bancassurance from the Perspective of Consumer Protection, Distribution of Insurance Products and Consumer Credit” Dr. Maria Demirakou, Senior Associate - Rokas Law Firm

2. The impact of Solvency II on credit insurance: The EU perspective (1) • Risk-based capital approach • 3 Pillars • No specific reference within Solvency II • Adaptations for compliance with new regime • No official quantification of implications of new regulatory regime • Critical issue: correct estimation of risk

3. The impact of Solvency II on credit insurance: The EU perspective (2) • Industry initiative to study underlying risks of credit insurance • Standards for description of exposure • Models of risks faced by credit insurers writing trade credit insurance • Methods for evaluation of Probable Maximum Loss (PML) • Assessment of capital addressing credit insurance risk portfolio • Understanding of inherent risks • Challenges

4. The impact of Solvency II on credit insurance: The Greek perspective • Recourse to bancassurance in specific cases only • Abolition of equalization reserve • Supervisory stance • Highly concentrated local credit insurance market • Influence of negative market conditions • Fluctuations in annual premium production

5. The IDD impact on borrower insurance: The EU perspective (1) • Main areas of concern • Bancassurance under IDD • General principles • Acting honestly, fairly and professionally in accordance with best interests of the customer • Fairness, clarity and no misleading nature of customer information • Disclosure of specific circumstances potentially entailing conflicts of interest • Identification of customer needs and demands • Suggestion of products addressing identified customer needs and demands

6. The IDD impact on borrower insurance: The EU perspective (2) • Granting of relevant information about the insurance product in a comprehensive form to safeguard informed purchase decision • IPID • Cross-selling practices • Where an insurance product is ancillary to a good or service that is not insurance, as part of a package or the same agreement, the insurance distributor shall offer the customer the possibility of buying the good or service separately. • Exemptions • Product oversight and governance requirements

7. The IDD impact on borrower insurance: The Greek perspective (1) • Act of Executive Committee of Bank of Greece under number 86/05.04.2016 on Code of Conduct of (Re)insurance Intermediaries • General principles and rules of professional conduct of (re)insurance intermediaries • Acting fairly, lawfully, and with due care and diligence • Granting of services with good faith, objectivity and impartiality • Appropriate information mechanisms safeguarding service quality • Immediate addressing of complaints or disputes

8. The IDD impact on borrower insurance: The Greek perspective (2) • Safeguarding of health competition between various insurance intermediaries • Effective management of conflicts of interests • Applicable customer information standards: • timeliness, completion, accuracy, sufficiency and appropriateness • due consideration of customer specific needs, financial state and possibility of understanding the conditions and risks of any proposed insurance product • granting thereof by appropriately qualified persons

9. The IDD impact on borrower insurance: The Greek perspective (3) • Identification of customer needs and demands and approach to risk undertaking • Proposal of insurance products meeting customer needs and demands • Prohibition of methods of unfair competition or unfair, unlawful or misleading acts or practices

10. The IDD impact on borrower insurance: The Greek perspective (4) • Circular 462/14.05.2013 of the Bank of Greece on distribution of insurance contracts by credit institutions • Adherence to insurance mediation laws and implementation of good faith principle in dealing with insurance program recipients, especially borrowers • Professional qualification of employees of credit institutions distributing insurance contracts • Due acceptance of insurance contracts submitted by borrower, fulfilling the covers under credit agreement

11. The IDD impact on borrower insurance: The Greek perspective (5) • Upon initiation of distribution of insurance contracts to borrowers, the competent employee shall explicitly clarify the following: • Credit institution’s simultaneous capacity as insurance intermediary • Lack of borrower’s obligation to be insured through the insurer collaborating with the credit institution • Borrower’s right to submit an insurance policy of their choice, subject to fulfillment of covers under credit agreement • Borrower’s right to cooperate with an insurance intermediary of their choice to find the appropriate insurance product

12. The IDD impact on borrower insurance: The Greek perspective (6) • Minimum mandatory content of pre-contractual information to borrower: • Clear, written and oral declaration that the credit institution offers only specific insurance products in its capacity as tied insurance intermediary • Reference (again) to borrower’s possibility to elect another insurance intermediary where they wish broader information • Prohibition of any misleading sale, by implication that only the insurance policy distributed through credit institution would fulfill credit agreement prerequisites

13. The IDD impact on borrower insurance: The Greek perspective (7) • In case of selection of credit institution for insurance mediation: • obligation for submission in writing of the pre-contractual information provided under the law; and • obligation for receipt of borrower’s signature for confirmation of relevant information • Prohibition, upon circumstances, of automatic charge of borrower’s credit cards or bank accounts for premium payment purposes • Evaluation

14. VIth AIDA EUROPE CONFERENCE (Vienna, 3-4 November 2016) Joint Working Party meetings: Consumer Protection & Dispute Resolution, Distribution of Insurance Products, Credit Insurance & Surety “Bancassurance from the Perspective of Consumer Protection, Distribution of Insurance Products and Consumer Credit” Thanks Dr. Maria Demirakou, Senior Associate - Rokas Law Firm