EIOPA Says Insurance Supervisors Are Looking Beyond Compliance as Product Oversight Matures Across Europe

Key Takeaways

• Risk-Based Supervision Has Matured: Many national insurance supervisors have shifted from procedural oversight toward operational, product-focused supervision centered on consumer outcomes.
• Supervisory Tools Are Becoming More Sophisticated: Regulators increasingly use conduct risk frameworks, market-screening tools and value-for-money methodologies to identify products that present the greatest risk of consumer detriment.
• Supervision Is Producing Tangible Outcomes: Product-focused reviews have resulted in insurers redesigning products, lowering customer costs and withdrawing products from the market.
• Institutional Changes Continue to Lag: Organizational restructuring, supervisory methodologies and resource development remain the areas where implementation is least complete across Member States.

Deep Dive

There is a moment in almost every regulatory framework when compliance ceases to be the interesting question. The forms have been completed and the governance structures exist. Policies have been approved, committees have met, and someone can demonstrate that every required process was followed. Yet consumers can still end up with products that were never truly designed for them. Regulation, at its most useful, begins where documentation stops.

On Tuesday, the European Insurance and Occupational Pensions Authority (EIOPA) published a follow-up report, which found that insurance supervisors across the European Union have made substantial progress in overseeing Product Oversight and Governance (POG) requirements. The authority's assessment suggests that many National Competent Authorities (NCAs) are no longer satisfied with confirming that insurers have governance frameworks in place. Increasingly, they are asking whether those frameworks produce better products and better outcomes.

POG occupies an unusually important place within the European insurance conduct regime because it addresses decisions that shape a product long before a customer signs a policy. The framework requires insurers to design, distribute, monitor and review products in a way that remains aligned with the needs, objectives and characteristics of their intended customers throughout the product's lifecycle. When those disciplines weaken, the consequences rarely appear immediately. They accumulate quietly through poorly defined target markets, inadequate product testing, ineffective monitoring and, eventually, products that deliver less value than they promised.

Supervision Moves Closer to the Product

The report follows EIOPA's 2023 peer review of POG supervision and examines how national regulators have implemented the recommendations that followed. Its overall conclusion is encouraging without being complacent. Across Europe, supervisory frameworks have become more mature, more operational and more firmly anchored in consumer outcomes than formal compliance alone.

Perhaps the clearest change is the growing embrace of risk-based supervision. Rather than applying broadly similar scrutiny across the market, many regulators now combine product-specific analysis with assessments of individual insurance undertakings, supported by dashboards, quantitative indicators, qualitative assessments, market-screening tools and value-for-money methodologies. The objective is straightforward: identify the products, firms and practices most likely to create consumer detriment before that harm becomes visible in complaints or enforcement cases.

That represents a subtle but meaningful evolution in regulatory thinking. Good supervision is no longer measured simply by whether every insurer receives attention. It is increasingly measured by whether supervisory attention reaches the places where it is needed most.

The practical consequences are already visible. According to EIOPA, supervisory activity has become more systematic and more outcome-oriented, with regulators making greater use of off-site analysis, thematic reviews, product-focused assessments, questionnaires and on-site inspections. In several jurisdictions, those efforts have produced concrete interventions, including product redesigns, reductions in customer costs and the withdrawal of products from the market.

Progress Is Real, but Not Uniform

The strongest progress came in the development of risk-based supervisory approaches, where more than three-quarters of EIOPA's recommended actions have now been fully implemented. Across all five supervisory areas examined in the report, 62% of recommendations have been fulfilled, while 26% remain partially implemented and 12% have yet to be completed.

The remaining gaps reveal something important about institutional change. Publishing new supervisory expectations is relatively quick. Reorganizing supervisory teams, building internal methodologies, developing practical assessment tools and recruiting specialist expertise is considerably slower. Those are structural changes that require organizations to rethink how supervision is performed rather than simply what it requires.

It is therefore no coincidence that organizational arrangements and supervisory methodologies account for the largest share of partially completed recommendations. In several Member States, supervisory frameworks remain under development, internal guidance has yet to be fully formalized or practical supervisory tools have not been comprehensively embedded into day-to-day oversight.

EIOPA also notes that some authorities continue to rely on broader conduct or prudential supervisory frameworks without translating them into approaches specifically tailored to Product Oversight and Governance. While proportionality remains an important supervisory principle, particularly for smaller markets and less complex products, the report makes clear that proportionality cannot become a reason to leave supervisory capabilities underdeveloped.

Convergence Is Still a Journey

The follow-up report ultimately describes a supervisory landscape that is moving in the right direction while acknowledging that Europe has not yet reached the consistency it seeks. Supervisory convergence is one of those ambitions that resists dramatic milestones. It advances through hundreds of incremental decisions: clearer guidance, sharper methodologies, stronger analytical tools and supervisors who become increasingly comfortable judging not only whether firms complied with regulatory requirements, but whether those requirements are producing the customer outcomes they were intended to secure.

That distinction may prove to be the report's most significant finding. Product Oversight and Governance was never intended to create another layer of paperwork. Its purpose has always been to influence the quality of products before consumers discover their shortcomings for themselves. The more supervision moves toward that question, the closer it comes to fulfilling the reason the framework exists in the first place.

National competent authorities with outstanding recommendations will report further progress to EIOPA within six months as the authority continues monitoring implementation across the European Economic Area.

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