Pan-European regimes: A pathway to mitigate lack of trust and complexity in insurance

Abstract

Over past years the insurance market has pursued a consistent and integrated approach in order to address well-known problems such as the overall complexity of insurance products, the lack of consumer confidence and, consequently, the detachment from, and reduced feeling of loyalty towards, insurers. Regulators across different sectors globally are turning to increasingly innovative approaches to disclosure and have placed greater focus on regulating product design. Yet, in the area of EU insurance services regulation, these approaches have not been implemented effectively. Most insurance products remain highly complex for average EU consumers. Hence, it is time to reflect the digital zeitgeist in EU disclosure and distribution rules, and to achieve the maximum level of consumer protection and facilitate the single market in the digital world. Consumer-centric product design, digital distribution and disclosures will help meet consumers' expectations, facilitate understanding of the financial market and support a sufficiently high and consistent level of consumer protection throughout Europe. A regulatory Pan-European regime has the potential to cut through regulatory challenges and build trust in cross-border financial services, contributing to the Capital Market Union objectives. It facilitates the use of digitalisation and provides a strong basis for supervision, which will foster trust and confidence in European citizens. European coordination will allow the EU to compete at international level, and enable European consumers to reap the benefits of the single market.