Delegated Regulation (IBIPS) on the integration of sustainability factors, sustainability risks and sustainability preferences into requirements for insurance undertakings and insurance distributors 2021/1257

Commission Delegated Regulation (EU) 2021/1257 (IBIPS) Insurance-Based Investment Products of 21 April 2021 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the inclusion of sustainability factors, sustainability risks and sustainability preferences in the requirements to insurance companies and insurance distributors regarding the supervision of products and their management and to the rules for the performance of activities and investment advice in the field of investment products based on insurance (Text with EEA relevance)

This regulation enters into force on the twentieth day after its publication in the Official Journal of the European Union. It applies from 2 August 2022.

Publication date

2. 8. 2021

Commission Delegated Regulation (EU) 2021/1257 modifies Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 with the aim incorporate sustainability factors into requirements for insurance companies and insurance distributors. The changes relate to the supervision of products, their administration and rules for the performance of activities and investment advice in the area of investment products based on insurance.

Reasons for changes:

• The regulation responds to the need to transition to a more sustainable economy in line with the goals of the Paris Agreement and the European Green Deal.
• The aim is to redirect capital flows into sustainable investments and prevent asset stranding.
• Increased investor demand for sustainable investments requires consideration of sustainability factors and sustainability-related objectives within product governance requirements.

Main changes:

• Obligation to consider sustainability factors: Insurers and insurance intermediaries must consider sustainability factors when approving and administering insurance products, especially those aimed at customers looking for products with a sustainable profile.
• Identification of the target market: It is necessary to determine exactly which group of customers with specific preferences in terms of sustainability the product is intended for.
• Transparent presentation of sustainability factors: Insurance distributors must have sufficient information on the sustainability factors of the product to be able to present them transparently to customers.
• Incorporating customer preferences for sustainability: Insurance intermediaries and insurance companies must take into account customers' sustainability preferences and identify potential conflicts of interest when providing investment advice.
• Distinguishing between different levels of sustainability: Insurance intermediaries and insurance companies must clearly explain to customers the differences between different insurance-based investment products and their level of sustainability.
• Prevention of greenwashing: Insurance intermediaries and insurance companies must not present products as sustainable if they do not in fact meet basic environmental and social standards.

The regulation entered into force on August 2, 2022 and is directly applicable in all EU member states.