Rekomendacje dla zakładów ubezpieczeń dotyczące oceny odpowiedniości ubezpieczenia na życie z elementem inwestycyjnym

KNF has published 15 recommendations for insurance companies, which can be classified into 4 main topics:
##### Part I – Management and Supervisory Boards
Recommendation 1
The management board is responsible for the implementation and functioning of the suitability of life insurance with an investment element process. Division and delegation of duties must be transparent and according to internal regulations of the company.
Recommendation 2
The management board must ensure that the implementation and functioning procedures are available in a written form so that they can be referred to when needed. This should contain at least the following elements: planning, organizing, controlling, monitoring and reporting of activities related to the assessment of suitability of life insurance with an investment element process.
Recommendation 3
The management board must perform regular inspections and evaluation of the assessment of suitability of life insurance with an investment element process to identify any risks. The results of such inspections and evaluations will be shared with the supervisory board. The minimum frequency of these inspections must be adequate to the insurance company’s risk profile and size. It is also required to inform the supervisory board about the number of contracts for life insurance with an investment element on an annual basis.
Recommendation 4
The supervisory board should monitor and supervise the functioning of the assessment of suitability of life insurance with an investment element process.
##### Part II – Suitability of life insurance with an investment element
Recommendation 5
The insurance company should ensure that the assessment of suitability of life insurance with an investment element process is adequate and righteous for the client. It is not allowed to recommend the purchase of life insurance with an investment element process if the client is not interested. Additionally, it is important to provide the customer with a questionary before the assessment process takes place, to evaluate if life insurance with an investment element is suitable to them.
Recommendation 6
The insurance company must receive all relevant documents from the client to assess the suitability of life insurance with an investment element process. Especially if the client agrees to high-risk investment, it is necessary to obtain information on the client’s knowledge and experience within the capital markets.
The client should also provide information such as the level of income and its source, and the level of knowledge and understanding of financial instruments and their functions.
Recommendation 7
The insurance company should present the client with proposals suitable to their profile, including the reasoning behind the proposed items and the difference between them.
Recommendation 8
The insurance company should not offer the investment element that has a higher investment risk than the level acceptable by the client. The investment level of the client might change throughout the duration of the life insurance, but this needs to be amended in a written form.
Recommendation 9
In case the insurance company has indications that the investment choices of the client are not adequate to their proficiency and knowledge level about financial instruments and their risks, it is necessary to take actions that will protect the client, especially delivering sufficient information. The written information should contain a thorough analysis and judgement of why the insurance company thinks the chosen investment is not suitable.
Recommendation 10
The insurance company should inform the client about having performed the suitability of life insurance with an investment element assessment and the consequences of not submitting the questionnaire. All the information provided by the client is not mandatory (only recommended by the insurance company) however not submitting relevant documents could lead to an inaccurate assessment.
Recommendation 11
All assessments of the suitability of life insurance with an investment element must be documented by the insurance company. The documentation should contain at least: the completed questionnaire, information on the knowledge, or its lack, of financial instruments, and all documents confirming the client’s understanding of the agreement between the two.
Recommendation 12
In its marketing and advertising strategies, the insurance company should not hide important facts about life insurance with an investment element, especially when it comes to risks and fees. The advantages can be listed out but only in combination with the associated costs and risks.
##### Part III – Preparation for counterparties involved in suitability of life insurance with an investment element and supervision of sales practices
Recommendation 13
The management board should ensure that persons involved in the assessment of suitability of life insurance with an investment element are qualified and properly trained. This applies to persons with direct contact with the client as well as people working in the back office. It is necessary to constantly monitor the competency level of these employees and provide any additional training and education in case they are needed, for example if there is a significant increase in complaints from clients.
Recommendation 14
The insurance company should train all employees to avoid sales techniques that would lead to marketing inadequate investment products to the clients‘ level of financial knowledge. This includes the sales bonus internal regulations, so that quality and quantity are both taken into consideration.
##### Part IV – Internal control and the role of internal audit
Recommendation 15
The assessment should be part of the company’s internal audit control. As part of this control, it is recommended that the insurance company keeps track of all the rejections to complete the questionnaire as well as written requests for specific investments. The internal audit review should monitor the risks as well as improvement possibilities in the process of assessment of the suitability.