The European Insurance and Occupational Pensions Authority (EIOPA) published today the results of its first EU-coordinated mystery shopping exercise, which examined the sales process for insurance-based investment products across 8 EU member states. As part of the exercise, trained shoppers made visits to insurers, banks, agents, brokers and post offices to assess distributors’ information-gathering processes, their information disclosure practices as well as their ability to offer products that match consumers’ needs and objectives. Overall, the findings indicate that while distributors often provide relevant information to shoppers, there are areas for improvement in terms of disclosure, transparency and consumer outcomes.
EIOPA received a new mandate in 2020 to coordinate mystery shopping activities across the EU and launched its first coordinated exercise in the insurance sector in June 2023. The campaign focused on insurance-based investment products (IBIPs), which are key investment options that allow consumers to access capital markets while benefitting from insurance coverage. The campaign took place between January 2024 and November 2024, with trained shoppers conducting test-purchases of IBIPs in real-life situations in 8 Member States. The aim of the exercise was to gather first-hand insights on the sales process of IBIPs rather than to assess distributors’ compliance with requirements.
The findings are primarily based on shoppers’ perceptions of the sales process, who were asked to provide feedback through standardised questionnaires covering the following aspects:
- the information gathering practices of distributors; and
- their provision of information to shoppers regarding the costs and risks of a product, including the provision of mandatory documents (the KID and sustainability disclosures).
EIOPA and the participating National Competent Authorities then assessed whether the products discussed were consistent with the shoppers’ profiles.
Main findings concerning information gathering and disclosure
The mystery shopping exercise revealed mixed results across distribution channels and markets.
Regarding information-gathering, most distributors (74%) sought information about shoppers’ ability to hold onto products for the recommended holding period, including their investment horizon, job status and overall financial situation. Aspects related to their risk tolerance and sustainability preferences, however, show less positive results.
When informing shoppers about the products, more than two thirds of distributors provided information on the risks, expected returns and recommended holding periods. Complete information regarding the costs of these products was provided in less than half of all interactions. The analysis also showed that so-called ‘key information documents’ (KIDs), when provided, aided shoppers’ understanding of a product’s characteristics.
Alignment of the discussed products with shoppers’ demands and needs
Following the mystery shopping exercise, EIOPA analysed whether the products offered were consistent with shoppers’ profiles. The products offered by distributors generally matched the stated profile of the shoppers, with 84% of products consistent with at least one of the pre-identified needs and objectives.
Nevertheless, the exercise revealed limited correlation between the thoroughness of the sales process and the alignment of the offered products with the shoppers’ profiles. Longer and more detailed sessions did not translate into better outcomes for shoppers, indicating a possible need to simplify the sales process.
Petra Hielkema, Chair of EIOPA said: “While the overall findings show that shoppers are generally asked about their demands and needs during the sales process and are provided with relevant product information and disclosures, we noted instances of poor consumer outcomes that warrant further analysis. In particular, we need to take a closer look at whether the numerous requirements introduced over time in the distribution process have inadvertently led to less beneficial outcomes for consumers. It is important to explore whether a more outcome-oriented sales approach could yield better results for consumers – especially when combined with simple, transparent products that offer value for money, as we advocated.”