The Status of a Manufacturer of an Insurance Product and the Agency Activity

Abstract

Following the principles of IDD, the Act of 15 December 2017 on insurance distribution introduced the concept of “‘a manufacturer of an insurance product” into Polish insurance practice and legislation. Obtaining the status of an insurance product manufacturer involves the responsibility for the design of this product, the necessity to maintain the process of the insurance product governance as well as the obligation to review and examine whether the product is not defective. Clearly and automatically, an insurance undertaking is a manufacturer of an insurance product. Nevertheless, in certain factual situations this status may be shared by an insurance undertaking with insurance intermediaries, including agents, if they perform a significant and decisive function in the product manufacturing process, that is to say, when an insurance intermediary’s impact on the shape of the product is essential. The status of a manufacturer of an insurance product is relevant while determining the liability of an insurance undertaking and a distributor for the product defect both in administrative proceedings before the Polish Financial Supervision Authority (KNF) and in civil disputes with customers. An agent, having the status of a manufacturer of an insurance product, is liable for regulatory responsibility, assessed primarily by the KNF, namely the responsibility for the fulfilment of the obligations imposed by the law regarding the proper pursuit of activities and in certain factual situations, also the application of appropriate procedures for the development and management of an insurance product, which will be at the centre of the assessment. In the event of an infringement of the duties and requirements for the performance of product governance by an agent and a manufacturer, the Financial Supervision Authority may apply a number of supervisory instruments.