Conduct of business: what’s new and what’s next for you at EU level? William Vidonja Head of Conduct of Business Croatian Insurance Days Opatija, 8 November 2018

Agenda 1 2 3 4 European regulatory landscape What’s new? What’s next? Key take-aways 4

A glimpse of the EU regulatory landscape … 5 YEARS AGO Solvency II Environmental Liability Directive Insurance Mediation Directive Anti-discrimination (Gender) Directive VAT Directive AML Directive Motor Insurance Directive ADR Directive Financial Conglomerates Directive

A glimpse of the EU regulatory landscape … 5 YEARS AGO IMPLEMENTED LEGISLATION Solvency II Solvency II Environmental Liability Directive Environmental Liability Directive Insurance Mediation Directive IDD Anti-discrimination (Gender) Directive Anti-discrimination (Gender) Directive VAT Directive VAT Directive AML Directive AML Directive Motor Insurance Directive IFRS ADR Directive ADR Directive Financial Conglomerates Directive Financial Conglomerates Directive Cybersecurity (NIS Directive) GDPR PRIIPs European Market Infrastructure Reg. Anti Tax Avoidance Directive

A glimpse of the EU regulatory landscape … 5 YEARS AGO IMPLEMENTED LEGISLATION ADOPTED LEGISLATION Solvency II Solvency II AML Directive Environmental Liability Directive Environmental Liability Directive IFRS 9 Insurance Mediation Directive IDD IORP II Anti-discrimination (Gender) Directive Anti-discrimination (Gender) Directive VAT Directive VAT Directive AML Directive AML Directive Motor Insurance Directive IFRS ADR Directive ADR Directive Financial Conglomerates Directive Financial Conglomerates Directive Cybersecurity (NIS Directive) GDPR PRIIPs European Market Infrastructure Reg. Anti Tax Avoidance Directive

A glimpse of the EU regulatory landscape … 5 YEARS AGO IMPLEMENTED LEGISLATION ADOPTED LEGISLATION PRESENTED, NOT ADOPTED Solvency II Solvency II AML Directive PEPP Environmental Liability Directive Environmental Liability Directive IFRS 9 ESAs review Insurance Mediation Directive IDD IORP II Anti-discrimination (age & disability) Anti-discrimination (Gender) Directive Anti-discrimination (Gender) Directive SMIT VAT Directive VAT Directive E-Privacy AML Directive AML Directive Country-by-country reporting Motor Insurance Directive IFRS MID review ADR Directive ADR Directive Free flow of non-personal data Financial Conglomerates Directive Financial Conglomerates Directive Sustainable finance Cybersecurity (NIS Directive) Collective redress IFRS 17 GDPR PRIIPs European Market Infrastructure Reg. Anti Tax Avoidance Directive

A glimpse of the EU regulatory landscape … 5 YEARS AGO IMPLEMENTED LEGISLATION ADOPTED LEGISLATION PRESENTED, NOT ADOPTED IN THE PIPELINE Solvency II Solvency II AML Directive PEPP SII Reviews Environmental Liability Directive Environmental Liability Directive IFRS 9 ESAs review Fintech/Insurtech Insurance Mediation Directive IDD IORP II Anti-discrimination (age & disability) New technologies (blockchain) Anti-discrimination (Gender) Directive Anti-discrimination (Gender) Directive SMIT Big data analytics VAT Directive VAT Directive E-Privacy PRIIPs Review AML Directive AML Directive Country-by-country reporting Liability of new technologies (AI) Motor Insurance Directive IFRS MID review Costs & performance ADR Directive ADR Directive Free flow of non-personal data Climate change/EU adaptation strategy Financial Conglomerates Directive Financial Conglomerates Directive Sustainable finance C-ITS/connected & automated driving Cybersecurity (NIS Directive) Collective redress Sustainable finance IFRS 17 GDPR Travel insurance PRIIPs IGS - insurance guarantee schemes European Market Infrastructure Reg. Anti Tax Avoidance Directive

A glimpse of the EU regulatory landscape … 5 YEARS AGO IMPLEMENTED LEGISLATION ADOPTED LEGISLATION PRESENTED, NOT ADOPTED IN THE PIPELINE Solvency II Solvency II AML Directive PEPP SII Reviews Environmental Liability Directive Environmental Liability Directive IFRS 9 ESAs review Fintech/Insurtech Insurance Mediation Directive IDD IORP II Anti-discrimination (age & disability) New technologies (blockchain) Anti-discrimination (Gender) Directive Anti-discrimination (Gender) Directive SMIT Big data analytics VAT Directive VAT Directive E-Privacy PRIIPs Review AML Directive AML Directive Country-by-country reporting Liability of new technologies (AI) Motor Insurance Directive IFRS MID review Costs & performance ADR Directive ADR Directive Free flow of non-personal data Climate change/EU adaptation strategy Financial Conglomerates Directive Financial Conglomerates Directive Sustainable finance C-ITS/connected & automated driving Cybersecurity (NIS Directive) Collective redress Sustainable finance IFRS 17 GDPR Travel insurance PRIIPs IGS - insurance guarantee schemes European Market Infrastructure Reg. REVIEWS Anti Tax Avoidance Directive

A glimpse of the EU regulatory landscape … 5 YEARS AGO IMPLEMENTED LEGISLATION ADOPTED LEGISLATION PRESENTED, NOT ADOPTED IN THE PIPELINE Solvency II Solvency II AML Directive PEPP SII Reviews Environmental Liability Directive Environmental Liability Directive IFRS 9 ESAs review Fintech/Insurtech Insurance Mediation Directive IDD IORP II Anti-discrimination (age & disability) New technologies (blockchain) Anti-discrimination (Gender) Directive Anti-discrimination (Gender) Directive SMIT Big data analytics VAT Directive VAT Directive E-Privacy PRIIPs Review AML Directive AML Directive Country-by-country reporting Liability of new technologies (AI) Motor Insurance Directive IFRS MID review Costs & performance ADR Directive ADR Directive Free flow of non-personal data Climate change/EU adaptation strategy Financial Conglomerates Directive Financial Conglomerates Directive Sustainable finance C-ITS/connected & automated driving Cybersecurity (NIS Directive) Collective redress Sustainable finance IFRS 17 GDPR Travel insurance PRIIPs IGS - insurance guarantee schemes European Market Infrastructure Reg. REVIEWS Anti Tax Avoidance Directive

A glimpse of the EU regulatory landscape … 5 YEARS AGO IMPLEMENTED LEGISLATION ADOPTED LEGISLATION PRESENTED, NOT ADOPTED IN THE PIPELINE Solvency II Solvency II AML Directive PEPP SII Reviews Environmental Liability Directive Environmental Liability Directive IFRS 9 ESAs review Fintech/Insurtech Insurance Mediation Directive IDD IORP II Anti-discrimination (age & disability) New technologies (blockchain) Anti-discrimination (Gender) Directive Anti-discrimination (Gender) Directive SMIT Big data analytics VAT Directive VAT Directive E-Privacy PRIIPs Review AML Directive AML Directive Country-by-country reporting Liability of new technologies (AI) Motor Insurance Directive IFRS MID review Costs & performance ADR Directive ADR Directive Free flow of non-personal data Climate change/EU adaptation strategy Financial Conglomerates Directive Financial Conglomerates Directive Sustainable finance C-ITS/connected & automated driving Cybersecurity (NIS Directive) Collective redress Sustainable finance IFRS 17 GDPR Travel insurance PRIIPs IGS - insurance guarantee schemes European Market Infrastructure Reg. REVIEWS Anti Tax Avoidance Directive

Agenda 1 2 3 4 European regulatory landscape What’s new? What’s next? Key take-aways 4

PRIIPs KID: a good idea Package Retail and Insurance-based Investment Products Key Information Document standardised disclosure format objectives, risks, costs, performance, etc. Used since 1st January 2018

PRIIPs KID: experience Objectives Comparability Understandability Better informed decisions

PRIIPs KID: experience Objectives Financial Times “FCA lambasted for ‘worst piece of financial regulation ever” (25/01/18) “Mis-selling fears erupt over ‘returns of 1m% plus’” (14/01/18) Comparability Understandability Better informed decisions

PRIIPs KID: experience Objectives The Irish Times “No KIDs, no PRIIPS: paper jam stalling new product sales.” “Rules aimed at making investment easier are actually making it harder” (04/01/18) Comparability Understandability Better informed decisions

PRIIPs KID: experience Objectives Het Financieele Dagblad “Insurers: we have to show too positive returns to our customers” (28/02/18) Comparability Understandability Better informed decisions

PRIIPs KID: experience Objectives International Adviser “EU knows Priips KID is not fit for purpose” “The Priips Kid has been almost universally derided since inception. The biggest criticism is that it could further complicate matters for investors” (24/10/18) Comparability Understandability Better informed decisions

PRIIPs KID: experience Objectives Reality check Comparability Understandability Better informed decisions Confusing Misleading Increased compliance risk

PRIIPs KID: experience Objectives Reality check Comparability Understandability Better informed decisions Confusing Misleading Increased compliance risk Why did it failed? One-sized-fits-all approach Not fit to insurance Little consideration of impact on consumers

PRIIPs KID: experience Objectives Reality check Comparability Understandability Better informed decisions Confusing Misleading Increased compliance risk Why did it failed? One-sized-fits-all approach Not fit to insurance Little consideration of impact on consumers PRIIPs quick-fix and review?

GDPR: what does it provide for? 1995 2016

GDPR: experience Enhanced rights & obligations Legal uncertainty High penalties for non-compliance Increased compliance risk Impact on innovation

IDD: what does it provide for? Wider scope Enhanced professional requirements Increased consumer protection rules Disclosures (including remuneration and IPID) Advice Cross-selling Product oversight & governance Enhanced rules for IBIPs

IDD: experience Risk of information overload for consumers

IDD: experience Unfit for digital distribution

Agenda 1 2 3 4 European regulatory landscape What’s new? What’s next? Key take-aways 4

PEPP: what is proposed? Aim: a portable pan-European pension product 3rd pillar, personal pension, long-term saving product; provided by an EU regulated financial undertakings; and subscribed to voluntarily by an individual in view of retirement PEPP-KID based on PRIIPs KID with additional disclosures (EC proposal) Digital distribution by default

PEPP: challenges ahead? Pre-contractual disclosures: risk of information overload Online sale of a PEPP by an insurance intermediary (EC proposal) Total: 130-174 PEPP KID (51) Originating from PRIIPs (36) PEPP Regulation Proposal (84) PEPP-specific (15) Product disclosures What about the directives on distance marketing for financial services and on e-commerce? What about the disclosures in the Solvency II directive? What about disclosures overlaps? Originating from IDD (28) Sales disclosures Originating from IDD DAs (5) GDPR (13) Distance marketing directive for financial services (27) E-commerce directive (6/20) ??? Solvency II (14/30) ??? Product disclosures

PEPP: challenges ahead? Pre-contractual disclosures: unfit for digital distribution Online sale of a PEPP by an insurance intermediary (EC proposal) Disclosure overload? PEPP KID (51) Originating from PRIIPs (36) PEPP Regulation Proposal (84) PEPP-specific (15) Product disclosures Originating from IDD (28) Sales disclosures Paper as default option? Originating from IDD DAs (5) GDPR (13) Distance marketing directive for financial services (27) PRIIPs KID IDD Complaints No layered approach? E-commerce directive (6/20) ??? Solvency II (14/30) ??? Product disclosures

Redress: what is proposed? EC “New Deal for Consumers”, April 2018 Regulation on consumer representative actions Permits qualified entities to launch collective actions Covers domestic and cross-border infringements of EU law Extends to 59 EU legislations, incl. SII, PRIIPs, IDD

Redress: challenges ahead? Shortcomings Third party litigation funding Fails to protect traders: “loser pays” principle No redress to consumers (small losses) Need for safeguards to prevent blackmail settlements & malicious claims

Agenda 1 2 3 4 European regulatory landscape What’s new? What’s next? Key take-aways 4

Take-aways for EU institutions One-size-fits-all Legal uncertainty Compliance risks Increased quantity Paper-based Fit-for-purpose Consumer-tested Quality-focused Future-proof Digital & innovation friendly

Take-aways for our industry

Thank you! Hvala! For more information www.insuranceeurope.eu Twitter: @InsuranceEurope