LIECHTENSTEIN Trends and Developments Contributed by: Alexander Ospelt, Lukas-Florian Gilhofer, Vivianne Auer and Laura Bayer, Ospelt & Partner Attorneys at Law Ltd
The FMA’s recent guidance on permitted remunera- tion for intermediaries – particularly in the pension and long-term savings context – highlights an increased regulatory willingness to intervene where commis- sion structures are incompatible with customer inter- ests. Although the guidance does not use the term “Value for Money,” it directly supports VfM outcomes by ensuring that customer funds are not eroded by unjustified distribution fees. Implications for Insurance Undertakings Operating in Liechtenstein The combined impact of stronger VfM expectations and increasingly rigorous POG oversight will create a significantly more demanding environment for insur- ance undertakings. To comply, insurance undertak- ings should deepen the integration of POG and VfM principles into their internal governance frameworks. POG must be a fully integrated part of governance, not an isolated procedural requirement. Insurers should ensure that: • risk, compliance, actuarial, and audit functions actively contribute to product reviews; • governance committees receive meaningful product-performance data; • decisions are documented and evidence-based; and • POG processes include checks on VfM, target- market appropriateness, and customer outcomes.
Products should be designed with the target market clearly defined from the outset. Insurers should dem- onstrate: • customer-centric design principles; • transparency in benefits and exclusions; • clear articulation of product value drivers; • alignment between pricing and risk coverage; and • effective communication of product features in customer-facing materials. POG obligations do not end at product launch. Insur- ers must continuously monitor: • claims behaviour; • emerging risks; • complaints; • return-on-premium outcomes; • persistency and lapse rates; and • deviations from expected customer benefits. When actual customer outcomes differ from projec- tions, insurance undertakings must take corrective action – such as redesigning or withdrawing the prod- uct, updating pricing, or improving disclosures.
308 CHAMBERS.COM
Powered by FlippingBook