New draft guidelines on the distribution of insurance products have been published by KNF, Poland’s financial supervision authority.

The guidelines concern four main issues:

  • the remuneration of policyholders and insurance intermediaries;
  • client relations;
  • the obligations of management and supervisory boards towards product distribution; and
  • compliance and internal controls.

The key proposals are:

  • a ban on combining the roles of policyholder and insurance intermediary in relation to one insurance agreement in all distribution channels;
  • a ban on policyholders receiving remuneration from the insurance company. Their only entitlement will be a reimbursement of the direct costs of insurance cover paid by the insured. This will mean that group insurance contracts will now be much less attractive options for distributing insurance cover;
  • a requirement for insurance companies to pay remuneration to intermediaries that isproportionate to the costs of the activities of such intermediaries;
  • a requirement for insurance companies to do more to give clients reliable and unambiguous information about insurance products, including providing a ‘product data sheet’;
  • a requirement for insurance companies to implement appropriate policies and procedures (covering compliance and internal control) in respect of product distribution.

It is likely that implementation of those guidelines may significantly reduce interest in group insurance and affect remuneration of insurance intermediaries. Also, it is not entirely clear whether the issuing such restrictive guidelines is within the KNF’s authority.