KNF has issued new guidelines for the distribution of insurance products by banks in the bancassurance model and by insurance companies in all distribution channels.

Implementation of the guidelines, for which there is a deadline of 31 March 2015, is likely to significantly reduce interest in group insurance and affect the remuneration of insurance intermediaries.

The guidelines introduce significant changes to:

  • Remuneration of policyholders, insurance intermediaries and banks using the bancassurance model
  • Client relations
  • Management board and supervisory board obligations
  • Compliance and internal control

The key changes are:

  • Insurance companies should pay remuneration for distributing insurance services to insurance intermediaries only and should relate the amount of remuneration to the costs of the cover
  • Banks acting as insurance intermediaries are entitled to receive remuneration from the insurance company, which should reflect the costs incurred by the bank in distributing the insurance products.
  • Banks acting as policyholders are entitled to be reimbursed by the client for the costs associated with concluding and administering the insurance agreement.

Other changes include:

  • A ban on combining the role of policyholder and insurance intermediary in relation to one insurance agreement in all distribution channels.
  • Insurance companies and banks should introduce a policy on informing clients about all factors relevant to making a decision on concluding an insurance agreement (or participating in group insurance) as well as procedures to prevent mis-selling.
  • Information provided about insurance investment products should include any risks and charges that may be imposed on consumers relating to the products and should include a ‘product data sheet’ containing detailed information about the products.
  • All information provided to clients should be reliable, unambiguous, not lead to any confusion and consist of both the positive and negative aspects of the insurance product (e.g. exclusions and restrictions of the insurance company’s liability).
  • The Management Boards of banks and an insurance companies are responsible for drawing up rules for the distribution of insurance products and on bancassurance, which should follow the operational strategy of the bank and the insurance company, approved by their Supervisory Board.
  • Banks and insurance companies should prepare and implement appropriate policies and procedures covering compliance and internal controls in respect of bancassurance and distributing insurance products.