PRIIPs
European regulation requiring a standardized three-page key information document for any packaged retail investment product, including unit-linked life insurance.
A retail saver comparing a unit-linked life policy, a fund and a structured product previously faced three sets of documentation with nothing in common. The PRIIPs regulation imposes a single document, identical in format, capped at three pages, whose content and section order are prescribed: what the product is, a summary risk indicator graded one to seven, performance scenarios, aggregate costs shown as an annual percentage and in euros, recommended holding period, and complaint procedures. The cost calculation includes implicit costs, which surfaced fee levels earlier documentation diluted. The text's history is instructive: the first version's performance scenarios, built by extrapolating past returns, displayed optimistic projections at the end of a bull cycle, to the point that the 2021 revision replaced them with a different methodology. A standardized document is therefore not neutral, and its calculation method is as much a public policy choice as a technical convention.
Regulation (EU) 1286/2014, applicable since January 1, 2018 after a one-year delay. Collective investment undertakings benefited from an extended exemption until January 1, 2023, when they came into scope. The summary risk indicator from one to seven has become, in commercial practice, the first comparison criterion for unit-linked options, well ahead of the performance scenarios it was meant to complement.
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