EIOPA has published its “Costs and Past Performance Report” that aims at improving transparency in the industry, facilitating comparisons between the different solutions available and strengthening the union of EU capital markets. The report provides an overview of the performance and costs of retail investment products in the EU. The report covers the period from 2017 to 2021.
According to the report, the post-COVID recovery led a high performance of the markets in 2021.
With regard to costs, despite a slight decrease in the costs of unit-linked products, profit-sharing products remain less expensive. In 2021, ESG products were more profitable and had lower costs than comparable products that do not consider ESG elements. For pension products, the trends are similar to those of IBIPs, since the products that are more exposed to market movements recorded higher returns in 2021.
Until June 2022, the request for insurance and pension products appears to be low. More than a third of European consumers do not own a saving product, including insurance and pension investment products. The percentage of consumers who do not own an insurance product has decreased to 8%. This trend is driven by motor insurance products (58%) , which is mandatory in all Member States, and home insurance products (63%).
Macroeconomic trends also have shown to impact the consumer behaviour, particularly the one of vulnerable groups. In fact, the purchase of necessary insurance coverage had delayed and difficulties in maintaining regular premium payments have emerged. Rising inflation may also have an effect on the income of consumers, lowering future disposable income.
Finally, the report predicts that the continued digitalisation of the insurance and pension sectors will lead to an easier access to products and services and will improve the prices, but requires a duly monitoring of cyber risks and possible price discrimination practices.