Transparency in Insurance: Fraunhofer ITWM Answers Eiopa Consultation Questions

Fraunhofer ITWM Participates in EIOPA-Consultation on »Value for Money«

News in brief / November 14, 2024

The EIOPA (European Insurance and Occupational Pensions Authority) published a consultation paper on »Value for Money« in October 2024. As a scientific partner, the Fraunhofer Institute for Industrial Mathematics ITWM has helped to evaluate insurance products and thus support supervisory authorities in measuring and monitoring the benefits for customers.

EIOPA's concept is a benchmarking method for national supervisory authorities to quantify the benefits of unit-linked and hybrid insurance products for customers. To validate the method, the authority sought valuable insights from stakeholders. To this end, 26 questions were answered by various organizations and companies in order to collect targeted feedback on the method and criteria for insurance products. The »Financial Mathematics« department at Fraunhofer ITWM also answered the questions. The mathematical institute is thus one of only two scientific institutions to participate in the consultation.

Method in Several Steps

The actual methodology consisted of three steps: creating product clusters, defining indicators for costs and returns and establishing benchmarks based on existing data.

The aim is to make products more transparent and comparable and to protect consumers from unjustified costs. National supervisory authorities should also be able to take into account the qualitative and quantitative advantages of products.

Fraunhofer ITWM Provides Scientific Perspectives

»The results are publicly available on the EIOPA website and help to further refine the concept. The consultation paper provides support for optimizing the insurance market in Europe, particularly with regard to consumer protection,« says Marcus Willems, business development manager for »Life Insurance and Pension Plans« at Fraunhofer ITWM. »Thanks to almost ten years of work with Product Information Center for Retirement Provision gGmbH (PIA), we have been able to gain extensive experience in this area, especially in the classification of private pension products. We are pleased that our expertise has now been incorporated here and that we have been able to contribute a scientific perspective.«

The benchmarks are crucial to the work of EIOPA and the supervisory authorities, which are increasingly adopting a data-driven and risk-based approach to monitoring value-for-money risks. They help to identify products with high financial risks and ensure that added value for consumers is at the heart of insurance products.

A comparable concept already exists in Germany: in January 2023, the BaFin (Federal Financial Supervisory Authority) implemented key aspects of the EIOPA methods with its leaflet 01/2023 [only available in German], thus ensuring that these principles are anchored at the national level. The Fraunhofer ITWM is also in contact with the BaFin to work together on further optimizations.

News

Transparency in Insurance: Fraunhofer ITWM Answers Eiopa Consultation Questions

Fraunhofer ITWM Participates in EIOPA-Consultation on »Value for Money«

Method in Several Steps

Fraunhofer ITWM Provides Scientific Perspectives

EIOPA Consultation Paper

More Information

Contact Press / Media

M.Sc. Marcus Willems

Contact Press / Media

M.A. Esther Packullat