Distribution channels and impact of legal changes stemming from EU regulation

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Juliana Boone
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1 Distribution channels and impact of legal changes stemming from EU regulation Technical Workshop German Insurance Association and Experts of the Western Balkan Primary Insurance Markets 10 June 2015, Bristol Hotel, Sarajevo Dirk Czaya, Swiss Life

Association and Experts of the Western Balkan Primary

2 Agenda Swiss Life Group and its Distribution Channels Variety of Distribution Channels in EU Legislation and regulation - intention and implementation EU legislation process Regulations and Directives in the financial sector Challenges and Consequences

intention and implementation EU legislation process

Over four million clients Listed on the SIX Swiss Exchange Swiss Life core markets: Switzerland, France, Germany Market presence under the Swiss Life

3 Brief profile Founded in 1857 as Schweizerische Rentenanstalt The Swiss Life Group is one of Europe's leading comprehensive life and pensions and financial solutions providers. Over four million clients Listed on the SIX Swiss Exchange Swiss Life core markets: Switzerland, France, Germany Market presence under the Swiss Life Select brand: Switzerland, Germany, Austria, Poland, Czech Republic International business: Luxembourg, Lichtenstein, Singapore Further brands within Swiss Life Group: tecis, Horbach, Proventus, Livit, Corpus Sireo Approx employees and certified financial advisors

4 Swiss Life Group offers an attractive business portfolio with strong market positions France Niche player in life focusing on affluent customer segment with private insurer strategy Top health insurer Switzerland Leading position in group life and individual life About 1 million clients insured Germany Leading provider of supplementary disability insurance (BUZ) and occupational pension schemes (BAV) Excellent reputation in broker market International PPLI: Leading in providing structured life insurance solutions around the globe Corporate solutions: Leading provider of comprehensive employee benefit solutions for multinationals Swiss Life Asset Managers Swiss Life s proprietary and third party asset manager Swiss Life Select Leading European financial advisor with strong market presence in core markets

schemes (BAV) Excellent reputation in broker market International PPLI: Leading in providing structured life insurance solutions around the globe Corporate solutions: Leading provider of

5 Business Units and Sales Force Switzerland France Germany International Asset Managers Distribution channels Distribution channels Distribution channels Distribution channels Distribution channels Tied agents Swiss Life Select Brokers IFAs Partner companies Banks Online Tied agents Salaried sales force Brokers IFAs Partner companies Banks Online Brokers Structured salesforce ( Swiss Life Select, Horbach, tecis, Proventus) IFAs Partner companies Banks Salaried sales force Swiss Life Select Brokers Banks Partner companies IFAs Salaried sales force Tied agents Banks / platforms IFAs

Salaried sales force Brokers IFAs Partner companies Banks Online Brokers Structured salesforce ( Swiss Life Select, Horbach, tecis, Proventus)

6 Agenda Swiss Life Group and its Distribution Cannels Variety of Distribution Channels in EU Legislation and regulation - intention and implementation EU legislation process Regulations and Directives in the financial sector Challenges and Consequences

7 Variety of Distribution Channels in EU No branch of the tree is the same: The distribution - landscape in the European life insurance seems to be particularly colorful.

8 Variety of Distribution Channels in EU Life insurance is sold in Europe in different ways. In Germany, the sales agency is particularly strong, the direct sales, however, has a shadowy existence. Source: Insurance Europe

9 Variety of Distribution Channels in EU

10 Agenda Swiss Life Group and its Distribution Cannels Variety of Distribution Channels in EU Legislation and regulation - intention and implementation EU legislation process Regulations and Directives in the financial sector Challenges and Consequences

11 Legislation and regulation - intention and implementation

12 Legislation and regulation - intention and implementation High-level Principles on Financial Consumer Protection G20 Finance Ministers and Central Bank Governors (October 2011) 1. Legal, regulatory and supervisory framework 2. Role of oversight bodies 3. Equitable and fair treatment of consumers 4. Disclosure and Transparency 5. Financial Education and awareness 6. Responsible Business Conduct of Financial Services Providers and Authorised Agents 7. Protection of consumer assets against fraud and misuse 8. Protection of consumer data and privacy 9. Complaints Handling and Redress 10.Competition

Equitable and fair treatment of consumers 4. Disclosure and Transparency 5. Financial Education and awareness 6.

13 Agenda Swiss Life Group and its Distribution Cannels Variety of Distribution Channels in EU Legislation and regulation - intention and implementation EU legislation process Regulations and Directives in the financial sector Distribution of Insurance Products in the Future

and implementation EU legislation process Regulations and

14 EU legislation process Article 288 TEC (Treaty establishing the European Community) To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States. A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods. A decision shall be binding in its entirety. A decision which specifies those to whom it is addressed shall be binding only on them. Recommendations and opinions shall have no binding force.

A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and

15 EU legislation process EU Initiatives IMD Directive PRIPs Regulation MiFID Directive Solvency II Directive National Initiatives: Politics Example Germany: Law concerning reformation of Life Insurance National Initiatives: Insurance Industry Initiatives of Insurance Industry: Code of Compliance in Distribution Code of Conduct (Data protection) Initiative of further education

Life Insurance National Initiatives: Insurance Industry Initiatives of Insurance Industry:

16 Agenda Swiss Life Group and its Distribution Cannels Variety of Distribution Channels in EU Legislation and regulation - intention and implementation EU legislation process Regulations and Directives in the financial sector Challenges and Consequences

17 Regulations and Directives in the financial sector PRIP On 26 November 2014, the Regulation on key information documents for packaged investment products to retail investors, and insurance investment products (PRIIP) was published in the Official Journal of the EU. The key information document (KID) is a unified and easy-to-read document, which contains the essential information about the product. The sheet must be written by anyone who hangs up the investment products and be made available to the retail investor, who considers to acquire such an investment product

The key information document (KID) is a unified and easy-to-read document, which contains the essential information about the product.

18 Regulations and Directives in the financial sector MiFID MiFID (Markets in Financial Instruments Directive ), a directive of the European Union (EU) on the harmonization of the financial markets in the European Single Market The directive's main objectives are to increase competition and consumer protection in investment services.

harmonization of the financial markets in the European Single Market The

19 Regulations and Directives in the financial sector IMD and IMD2 Aim of Insurance Mediation Directive (IMD from 2002): Creating a single market Aim of Insurance Mediation Directive (IMD 2): Strengthening of consumer protection, confidence in insurance products, of the internal market.

market Aim of Insurance Mediation Directive (IMD 2): Strengthening of

20 Regulations and Directives in the financial sector Insurance Distribution Directive (IDD): Remain basically: the principle of minimum harmonization the principle of mutual recognition.

21 Regulations and Directives in the financial sector Key issues relating to the proposals in the IDD (selection) Registration of all intermediaries Disclosure and transparency Enhanced professional requirements

22 Regulations and Directives in the financial sector The further timetable for the IDD End of 2014 EU Council presented its proposals Summer 2015 After completion trialogue Adopting IMD II, Beginning of the two-year implementation period Spring 2015 Trialogue between EU Commission European Parliament and EU Council Not later than 2017 Implementation IDD 2 In German law

23 Agenda Swiss Life Group and its Distribution Cannels Variety of Distribution Channels in EU Legislation and regulation - intention and implementation EU legislation process Regulations and Directives in the financial sector Challenges and Consequences

24 Challenges and Consequences Challenges from the market situation: Persistent low interest rates complicates the development and the distribution of life insurance products and pension schemes The trend continues: premiums decline in the property lines Biometric risk: an aging society, including the intermediaries and customers Digitization of processes will go on rapidly

25 Challenges and Consequences Consequences for all intermediaries (distribution channels) Economically (decreasing number, financial strength necessary) Documentation Further education (permanent learning) Processes and digitization => increasing administrative expenses and bureaucracy

26 Summary The distribution of financial and insurance products will be increasingly unified and regulated Regulation and changing market situation will have a significant impact on future distribution channels (number, variety and quality) Only those who will adjust quickly to these future requirements will be successful in the future

27 Thank you for your attention!

G20 HIGH-LEVEL PRINCIPLES ON FINANCIAL CONSUMER PROTECTION

G20 HIGH-LEVEL PRINCIPLES ON FINANCIAL CONSUMER PROTECTION October 2011 The high-level principles were developed as a response to the G20 Finance Ministers and Central Bank Governors call in February 2011