VIth AIDA EUROPE CONFERENCE (Vienna, 3-4 November 2016) Joint Working Party meeting: Consumer Protection & Dispute Resolution, Distribution of Insurance Products, Credit Insurance & Surety “Bancassurance from the Perspective of Consumer Protection, Distribution of Insurance Products and Consumer Credit” Bancassurance in the EU and in Greece: The impact of Solvency II on credit insurance and the IDD impact on borrower insurance Dr. Maria Demirakou, Senior Associate - Rokas Law Firm

The impact of Solvency II on credit insurance: The EU perspective (1) Risk-based capital approach 3 Pillars No specific reference within Solvency II Adaptations for compliance with new regime No official quantification of implications of new regulatory regime Critical issue: correct estimation of risk

The impact of Solvency II on credit insurance: The EU perspective (2) Industry initiative to study underlying risks of credit insurance Standards for description of exposure Models of risks faced by credit insurers writing trade credit insurance Methods for evaluation of Probable Maximum Loss (PML) Assessment of capital addressing credit insurance risk portfolio Understanding of inherent risks Challenges

The impact of Solvency II on credit insurance: The Greek perspective Recourse to bancassurance in specific cases only Abolition of equalization reserve Supervisory stance Highly concentrated local credit insurance market Influence of negative market conditions Fluctuations in annual premium production

The IDD impact on borrower insurance: The EU perspective (1) Main areas of concern Bancassurance under IDD General principles Acting honestly, fairly and professionally in accordance with best interests of the customer Fairness, clarity and no misleading nature of customer information Disclosure of specific circumstances potentially entailing conflicts of interest Identification of customer needs and demands Suggestion of products addressing identified customer needs and demands

The IDD impact on borrower insurance: The EU perspective (2) Granting of relevant information about the insurance product in a comprehensive form to safeguard informed purchase decision IPID Cross-selling practices Where an insurance product is ancillary to a good or service that is not insurance, as part of a package or the same agreement, the insurance distributor shall offer the customer the possibility of buying the good or service separately. Exemptions Product oversight and governance requirements

The IDD impact on borrower insurance: The Greek perspective (1) Act of Executive Committee of Bank of Greece under number 86/05.04.2016 on Code of Conduct of (Re)insurance Intermediaries General principles and rules of professional conduct of (re)insurance intermediaries Acting fairly, lawfully, and with due care and diligence Granting of services with good faith, objectivity and impartiality Appropriate information mechanisms safeguarding service quality Immediate addressing of complaints or disputes

The IDD impact on borrower insurance: The Greek perspective (2) Safeguarding of health competition between various insurance intermediaries Effective management of conflicts of interests Applicable customer information standards: timeliness, completion, accuracy, sufficiency and appropriateness due consideration of customer specific needs, financial state and possibility of understanding the conditions and risks of any proposed insurance product granting thereof by appropriately qualified persons

The IDD impact on borrower insurance: The Greek perspective (3) Identification of customer needs and demands and approach to risk undertaking Proposal of insurance products meeting customer needs and demands Prohibition of methods of unfair competition or unfair, unlawful or misleading acts or practices

The IDD impact on borrower insurance: The Greek perspective (4) Circular 462/14.05.2013 of the Bank of Greece on distribution of insurance contracts by credit institutions Adherence to insurance mediation laws and implementation of good faith principle in dealing with insurance program recipients, especially borrowers Professional qualification of employees of credit institutions distributing insurance contracts Due acceptance of insurance contracts submitted by borrower, fulfilling the covers under credit agreement

The IDD impact on borrower insurance: The Greek perspective (5) Upon initiation of distribution of insurance contracts to borrowers, the competent employee shall explicitly clarify the following: Credit institution’s simultaneous capacity as insurance intermediary Lack of borrower’s obligation to be insured through the insurer collaborating with the credit institution Borrower’s right to submit an insurance policy of their choice, subject to fulfillment of covers under credit agreement Borrower’s right to cooperate with an insurance intermediary of their choice to find the appropriate insurance product

The IDD impact on borrower insurance: The Greek perspective (6) Minimum mandatory content of pre-contractual information to borrower: Clear, written and oral declaration that the credit institution offers only specific insurance products in its capacity as tied insurance intermediary Reference (again) to borrower’s possibility to elect another insurance intermediary where they wish broader information Prohibition of any misleading sale, by implication that only the insurance policy distributed through credit institution would fulfill credit agreement prerequisites

The IDD impact on borrower insurance: The Greek perspective (7) In case of selection of credit institution for insurance mediation: obligation for submission in writing of the pre-contractual information provided under the law; and obligation for receipt of borrower’s signature for confirmation of relevant information Prohibition, upon circumstances, of automatic charge of borrower’s credit cards or bank accounts for premium payment purposes Evaluation

Thanks VIth AIDA EUROPE CONFERENCE (Vienna, 3-4 November 2016) Joint Working Party meetings: Consumer Protection & Dispute Resolution, Distribution of Insurance Products, Credit Insurance & Surety “Bancassurance from the Perspective of Consumer Protection, Distribution of Insurance Products and Consumer Credit” Thanks Dr. Maria Demirakou, Senior Associate - Rokas Law Firm