The Autorité des marchés financiers (AMF) is launching a consultation on conflicts of interest surrounding the incentive structures that are in use in the insurance sector.

Specifically, the AMF has put out a paper that aims to examine the risks of poor customer treatment that can be created by incentive structures, and how the industry and regulators should be addressing these risks.

“This issues paper is a new step in the process begun in 2013,” says Louis Morisset, president and CEO of the AMF, in a statement. “The aim is to further discussions on the risk of certain incentive categories negatively impacting the fair treatment of consumers, the control and supervision mechanisms that insurers should implement to mitigate this risk, and the competitive imbalance that these incentives can create.”

The regulator notes that the paper follows from a 2015 survey of insurers, which highlighted several concerns, including the management of conflicts connected with remuneration. That review found that “in many cases insurers’ incentive systems were based solely on volume of written premiums” and that some of these systems included problematic tactics, such as sales contests.

In addition, the AMF reports that, in most cases, it did not see incentives that “explicitly factored in the fair treatment of consumers.”

The new paper exploring these issues will help inform the AMF’s ongoing supervisory and compliance efforts, it notes.

The paper is out for comment until Oct. 15.

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