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THE COMPLEXITY THE COMPLEXITY

OF INSURANCE PRODUCTS OF INSURANCE PRODUCTS AND AND

THE DEVELOPEMENT OFTHE DEVELOPEMENT OF

FINANCIAL EDUCATION BY THE FINANCIAL EDUCATION BY THE INSURANCE REGULATORINSURANCE REGULATOR

Sofia, 29 June 2010

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International references: ‘OECD Recommendation on Good Practices Enhanced Risk Awareness and for Education on Insurance issues’

ISVAP relevant past experience: the ‘Practical Guide to Insurance’

ISVAP upcoming initiatives: - dedicated website project

- cooperation with other Italian Public Authorities

Further steps ahead

INDEXINDEX

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OECD Recommendation on Good Practices for OECD Recommendation on Good Practices for Enhanced Risk Awareness and Education on Enhanced Risk Awareness and Education on

Insurance IssuesInsurance Issues

Subjects involved: Governments and private and public institutions

Education process:

- as part of a wider effort

- through distinct programmes

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Government action:

should include promoting a ‘culture’ of responsibility of personal protection at all levels of education

could involve the development of specific websites or a sub-site of the supervisory authority dedicated to consumer information

OECD suggestions on Governments actionOECD suggestions on Governments action

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Government action:

Should also consider the development, at national level, of appropriate specialized structures - possibly within the framework of existing authorities – which would be in charge of promoting and coordinating risk awareness and education on insurance issues

OECD suggestions on Government actionOECD suggestions on Government action

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EDUCATION ON INSURANCE ISSUES EDUCATION ON INSURANCE ISSUES CORE OBJECTIVESCORE OBJECTIVES

Heighten awareness and responsibility vis-à-vis potential risks to which individuals are exposed and the means by which insurance can best cover those risks

Enable citizens:

- to develop the knowledge, understanding and confidence needed to adequately appraise and understand the policies they require

- to know where to look for additional information, objective advice and help

- to take informed decisions

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EDUCATION ON INSURANCEEDUCATION ON INSURANCE WITHIN THE INSURANCE REGULATORY AND WITHIN THE INSURANCE REGULATORY AND

SUPERVISORY FRAMEWORK SUPERVISORY FRAMEWORK

EDUCATION ON INSURANCE ISSUES:

Does not substitute prudential regulation and policyholder

protection

Helps prudential supervision as it is more difficult to

mislead citizens educated on this matter

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INSURANCE PRODUCTS COMPLEXITY INSURANCE PRODUCTS COMPLEXITY

Insurance business is characterized by:

Policy complexity and heterogeneity often referred to as ‘information asymmetry’ between non-expert customers and insurers

Increasing diversity of insurance products and types of policies and the variety of insurance providers

Emergence of insurance products which involve a greater risk transfer to the insured

Need for systematic financial education in conjunction with an appropriate consumer protection framework

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ISVAP first major consumer information programme

First published in 2004 and afterwards regularly updated

Still available on line on the institutional website

Conceived as a support tool for policyholders

Depicts guarantees and rules of the most common Insurance policies

ISVAP PRACTICAL GUIDE TO INSURANCEISVAP PRACTICAL GUIDE TO INSURANCE

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Deals particularly with:

- ISVAP’s role and activity

- Compulsory Motor Insurance

- Life Assurance

- Health Insurance

- Complaints handling

ISVAP PRACTICAL GUIDE TO INSURANCEISVAP PRACTICAL GUIDE TO INSURANCE

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Available both in a printable format and in an interactive format

‘Interactive format’ includes an organized set of questions, answers and suggestions on how to behave in some of the most common situations consumers may face

Uses clear and plain language Contains useful Glossary

ISVAP PRACTICAL GUIDE TO INSURANCEISVAP PRACTICAL GUIDE TO INSURANCE

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Isvap ‘dedicated website’ project on Insurance education

Future commitment to cooperation development among public national authorities

ISVAP UPCOMING INITIATIVESISVAP UPCOMING INITIATIVES

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Project main characteristics

Website contents

User- friendly facilities

Further project development

Future efforts

ISVAP PROJECT ON INSURANCE EDUCATIONISVAP PROJECT ON INSURANCE EDUCATION

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Financial education addressed and treated above all as a ‘communication’ matter

Appropriate communication tools needed to:

I. Gain individuals attention

II. Make individuals imagine themselves in real-life situations,

using a practical approach, giving real-life situations as

examples

Use of innovative e-learning methods

PROJECT MAIN CHARACTERISTICPROJECT MAIN CHARACTERISTIC

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Interactive Guides available, dealing with:

I. Insurance basic concepts

II. Non-life and life policies

III.‘What to do’ in case of claims

IV.Complaints handling

V. ISVAP’s role and activity

WEBSITE CONTENTSWEBSITE CONTENTS

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Insurance guides presented not only with a ‘traditional’ layout

Educational ‘pills’ available to allow for interactive use (by

clicking on an image, an interactive sequence of information and

images is activated. These images are accompanied by narration.

It is possible to go both forwards and backwards)

Real life situations depicted

USER - FRIENDLY FACILITIESUSER - FRIENDLY FACILITIES

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To date, ISVAP’s major concern has been financial

education effectiveness

Future efforts needed for financial education effectiveness

evaluation in order to ‘fine-tune’ initiatives already underway

and/or suggest new ones and set realistic expectation for the

possible impact of new programmes

Importance of ‘experience sharing’ underlined by Rome

‘OECD – Bank of Italy’ Conference

FUTURE EFFORTS NEEDEDFUTURE EFFORTS NEEDED

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On the occasion of the Rome ‘OECD – Bank of Italy’

Conference Italian financial regulators announced they had

just signed an agreement on financial education issues

The first Italian regulators initiative in line with the agreement

on financial education issues will be represented by future

implementation of a common website

INSURANCE REGULATOR COMMITMENT INSURANCE REGULATOR COMMITMENT TOWARDS COOPERATION DEVELOPMENT TOWARDS COOPERATION DEVELOPMENT

AMONG PUBLIC AUTHORITIESAMONG PUBLIC AUTHORITIES

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Parliamentary Bill on financial education

Need for coherent and coordinated national initiatives

and strategies

Need for ensuring financial education development in a

sustainable, consistent and efficient way

FURTHER STEPS AHEADFURTHER STEPS AHEAD