1. Insurance Europe assessment of the proposed PEPP Regulation
Michaela Koller, director general
Brussels, 31 January 2018
European Parliament Public Hearing

2. Two key priorities for the PEPP
Guarantee as default:
Protection of the
financial outcome
Behavioral economics
PEPP
Cost-efficiency:
Collective investment
Long-term horizon
Capital requirements
Number compartments
Avoid complexity:
One default option
Tailored information disclosures

3. How to match safety and attractiveness?
How traditional insurance works:
Smoothing and pooling mechanism, ie. getting the average long-term return

4. Excessive capital requirements are detrimental
Excessive capital requirements create real damage
20% smaller pension pot after 25 years
Estimated cost of capital:
0.5%
1.5%
Scenario 1:
Careful calibration
based on real risk
Capital = 5% of liabilities
Scenario 2:
Overly conservative calibration
Capital =15% of liabilities

5. How to avoid unecessary complexity?
Business case: online PEPP sold by an insurance intermediary
Disclosure overload?
PEPP KID
(51)
Originating from PRIIPs (36)
PEPP
Regulation
Proposal
(84)
PEPP-specific (15)
Product
disclosures
Originating from IDD (28)
Sales
disclosures
Originating from IDD DAs (5)
Digital friendly?
GDPR (13)
Distance marketing directive for financial services (27)
E-commerce directive (6/20)
Layered approach?
??? Solvency II (14/30) ???
Product
disclosures
Total:

6. For more information
www insuranceeurope eu