The majority of the distribution on the life insurance market occurs through external distribution channels. It is therefore important for insurance firms to fulfil their responsibility to choose suitable distribution channels for the target market and follow up that the insurance products are distributed to the proper target group.
There are large variations between the 20 firms included in FI's analysis, but a clear majority primarily rely on external distribution channels. Insurance intermediaries are the dominant distribution channel, while distribution via credit institutions is particularly common for unit-linked insurance, often through firms in the same group as the insurance firm. The number of external distributors the insurance firms use varies from a few to several hundred.
There is a risk in insurance distribution that the products consumers buy are not suitable given their needs and circumstances. In order to reduce this risk there are rules regarding the distribution of insurance that insurance firms and other insurance distributors need to apply.
The purpose of FI's analysis is to get a detailed view of distribution on the life insurance market, which will serve as a basis for the authority's risk assessment and planning of future supervision based on the insurance distribution rules.
In 2020 and 2021, FI intends to conduct investigations based on the rules regarding product oversight and governance. The insurance firms' responsibility for their distribution channels will be a central focus in this supervision.