Deregulation in the U.S. sparks debate on competitiveness in European insurance.

The recent assessment by the CEO of one of the largest banks in Europe regarding deregulation policies in the United States has sparked a debate in the European financial sector. The prominent figure praised the new U.S. administration for its focus on reducing bureaucracy, an aspect she believes is crucial for improving competitiveness in an environment where Europe continues to struggle with excessive regulation. This acknowledgment highlights a latent concern in the sector: overregulation in the European Union could jeopardize competitiveness against rapidly accelerating markets, especially in areas like artificial intelligence. A clear example of the current state of regulation in Europe can be found in the Consumer Trends Report 2024, recently published by EIOPA, the European insurance supervisory authority. This report not only provides an analysis of the insurance sector's behavior but also reflects consumers' concerns and perceptions regarding the products offered. Among its findings, widespread dissatisfaction with the value for money of insurance-based investment products, particularly those known as PIBs and unit-linked life insurance, stands out. The situation becomes even more concerning in countries like Spain, where only 36% of consumers believe they receive good value for money from these products. This figure is alarming, especially considering that Spain has seen notable growth in other types of life insurance, such as annuities and term life insurance. This suggests a disconnect between the supply of investment products and the actual needs of consumers. EIOPA's report also expands its analysis to other types of insurance, revealing that products like payment protection insurance and electronic device insurance are being critically evaluated by supervisory authorities. This broader focus indicates that concerns about value for money are not limited to the life sector but encompass the entire spectrum of the insurance market. An interesting aspect of the report is the observation of how the distribution of these products affects their market performance. EIOPA has found significant differences in claims rates and commissions, depending on whether the insurance is sold directly or through intermediaries. While direct sales present higher claims rates and lower commissions, intermediary sales show the opposite trend. This finding invites reflection on the role intermediaries play in risk mitigation but also raises questions about pricing transparency. However, this question about the quality and price of insurance is not a new topic and has, in fact, been under scrutiny since 2021. Despite warnings and attempts at regulation, legal uncertainty remains a significant obstacle. The lack of clear and uniform parameters for assessing the value-for-money of products means that both insurers and intermediaries face challenges in meeting supervisory standards. EIOPA has attempted to establish a methodology to address this issue, but so far, its efforts have resulted in more confusion than clarity. The ambiguity in regulation leaves operators in a state of uncertainty, without a clear direction to follow. This translates to the very authorities that should be supervising leaving the interpretation of the rules in the hands of market actors. In Spain, the situation is even more complex. Pressure on commission systems in the insurance industry has led to the opening of investigations by the Directorate General of Insurance and Pension Funds, although the results of these actions are still inconclusive. This precedent suggests that the supervision of the sector is undergoing a transformation process, but the lack of concrete results raises questions about the effectiveness of these measures. Finally, as the debate over financial regulation and consumer protection continues, it seems evident that the insurance industry must work on improving its products. Value for money must be a priority, not only due to regulatory pressure but also to regain consumer trust. With a competitive environment intensifying, especially in light of innovations in artificial intelligence in other markets, the time to act is now. Decisions made in the coming months will be crucial for the future of the European insurance sector.