Bancassurance in the Czech Republic: navigating high remuneration and conflicts of interest

The EIOPA revealed that a substantial portion of the gross written premium (GWP) paid by consumers is allocated to bank commissions. For instance, commissions for mortgage credit protection insurance (CPI) range between 30 % and 70 % of GWP, while consumer credit CPI commissions range from 40 % to 80 %. This high remuneration often does not correlate with the actual costs and might lead to unjustified charges for consumers.

The EIOPA issued a warning in September 2022, urging banks and insurers to address high remuneration and conflicts of interest. The EIOPA expects them to offer fair value products to consumers and to implement governance measures to mitigate conflicts of interest. 

In the Czech Republic, the high commission rates for bancassurance products are concerning. For CPI, commissions often exceed 50 % of GWP, significantly higher than in other EU countries. The same approach as the EIOPA's is anticipated from the Czech regulator, the Czech National Bank (CNB).

To align with the position of the EIOPA and the CNB, Czech banks and insurers should review their cooperation agreements, enhance internal policies and improve contractual documentation. By doing so, the bancassurance sector in the Czech Republic can significantly evolve.

authors: Natálie Rosová, Kristýna Tupá