The European Insurance and Occupational Pensions Authority (EIOPA) published its Costs and past performance report analysing costs, charges and value for money characteristics of retail investment products in its remit over 2020–2023. The report finds that net returns on insurance-based investment products (IBIPs) improved in 2023 and across the four-year period, largely reflecting financial market performance, but generally did not outperform inflation and varied widely by product risk profile and consumers’ investment objectives, while product costs remained high for some segments. Unit-linked and hybrid products delivered positive net returns to policyholders in 2023, with higher-risk unit-linked products averaging net returns above 10% compared with 6% for lower-risk products. Profit participation products also generated positive returns but did not outperform inflation in 2023. Although inflationary pressures did not materially increase IBIP costs, costs remained elevated, with profit participation products identified as the most cost-effective option; unit-linked and hybrid products showed a 2.4% average reduction in yield, and costs varied across Member States, including in some cases between cross-border and domestic products. Sustainable products expanded further in 2023, with 55% of products in the sample incorporating environmental, social and governance features, and sustainable equity funds outperforming non-ESG counterparts over the four-year period. For pensions, personal pension products broadly mirrored IBIP trends, with unit-linked features delivering an average net return of 2.1% over 2020–2023 and profit participation features delivering 1.2%, while defined contribution schemes of Institutions for Occupational Retirement Provision in the EEA saw growth in active members, total assets and income ratios. The analysis is based on an inaugural exercise under EIOPA’s revised Costs and Past Performance data collection and methodology, drawing on a sample of insurance undertakings covering unit-linked, profit participation, hybrid and personal pension products. Participating undertakings represented around 63% of the European unit-linked and profit participation markets by gross written premium, and all EEA Member States participated except Cyprus, Iceland and The Netherlands.
European Insurance and Occupational Pensions Authority 2025-04-15
European Insurance and Occupational Pensions Authority publishes costs and past performance report showing IBIPs returns rose but did not beat inflation
The European Insurance and Occupational Pensions Authority (EIOPA) released its Costs and Past Performance report, highlighting improved net returns for insurance-based investment products (IBIPs) in 2023, though generally not surpassing inflation. Unit-linked and hybrid products showed positive returns, with higher-risk unit-linked products averaging over 10%, while sustainable products expanded, with 55% incorporating ESG features. The analysis, based on EIOPA's revised data collection, covered a significant portion of the European market, excluding Cyprus, Iceland, and the Netherlands.